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North Peninsula Market Reports

North Peninsula Office Market

Average FS Asking Rent (Price/SF)      $4.97
Availability Rate(%)      10.0%
Net Absorption (SF) 105,475

The North Peninsula office market kicked off the year with a strong first quarter, recording its second consecutive quarter of positive net absorption and overall rate rental growth. Overall rates were up to $4.97/SF full service from $4.85/SF in the previous quarter, while the overall vacancy for the county was recorded at 9.9%, down from 10.2% in the previous quarter. Gross absorption for the quarter was recorded at 1,494,588 square feet, consistent with the previous quarter's total of 1,496,921 square feet. Tenant demand increased to 3.25 million square feet this quarter, up from 3.2 million square feet in the previous quarter, with the bulk of the requirements now in the 10,000 to 19,999-square-foot-range. Demand remains highly focused on property in transit-served areas and high-quality under construction or renovated space. Downtown markets that encapsulate all the details mentioned above continue to experience escalating rents and robust /construction activity.

  North Peninsula Industrial Market

Average NNN Asking Rent (Price/SF)    $3.19
Availability Rate (%)      3.4%
Net Absorption (SF)  36,180

The R&D market's deal velocity simmered down this quarter, as 488,569 square feet of gross absorption was recoded compared with 1,041,523 square feet in the previous. The majority of the leasing activity was concentrated in South San Francisco, which accounted for 60% of the total R&D gross absorption value. Despite the decline in leasing activity, the North Peninsula R&D market ended the first quarter of 2019 with a vacancy rate of 4.6%, down from 5.2% in the previous quarter. Additionally, positive absorption was recorded for a second consecutive quarter closing at 151,696 square feet while ten out of the 12 major submarkets recorded overall rent increases. Expect positive absorption and rising asking rates throughout the North Peninsula as a well-established and start-up tenants continue to wait for newer projects to be delivered in order to satisfy demand. Demand for industrial space across the North Peninsula remains strong, but with declining supply, average asking rates have increased to $1.58/SF triple net, up from $1.50/SF in the previous quarter and $1.48/SF from one year ago. Vacancy decreased or remained stagnant in eleven out of the 12 major submarkets in the county, most notably in San Bruno where vacancy dropped from 5.6% to 0.6% quarter over quarter. The severe swings in vacancies continue to be directly attributed to the historically low supply of inventory throughout the North Peninsula.



North Peninsula Office Market
1Q19
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North Peninsula Industrial Market
1Q19
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