North Peninsula Office Market
| Average FS Asking Rent (Price/SF) | $5.96 |
| Availability Rate(%) | 11.9% |
| Net Absorption (SF) | -896,553 |
The second quarter of 2020 for the North Peninsula office market showed signs of vacancy and rental rates trending up, construction and deliveries staying neutral and absorption trending down. Despite softening tenant demand and rising vacancy in the North Peninsula, average asking rates were recorded at $5.61/SF full service, up from $5.53/SF in the prior quarter. The average Class A rate was recorded at $5.96/SF, up from $5.90/SF in the previous quarter but down from $6.00/SF one year ago. Overall vacancy was recorded at 11.9% this quarter, up from 10.2% in the previous quarter. On the sublease front, vacancy counted for 3.1% of the total inventory and 24.9% of the total vacancy. The construction pipeline currently holds approximately 4.0 million square feet awaiting completion, with 1.1 million square feet expected to deliver next quarter; however, no new deliveries were reported this quarter. At the end of the last quarter, the San Francisco Bay Area was in the initial stages of Governor Gavin Newsom’s stay-at-home mandate as a result of the COVID-19 pandemic. Now at the end of the second quarter, signs of the economic shutdowns throughout the region as a result of the pandemic can be seen.
Download North Peninsula Office Market 2Q20North Peninsula Industrial Market
| Average NNN Asking Rent (Price/SF) | $3.07 |
| Availability Rate (%) | 6.3% |
| Net Absorption (SF) | -294,320 |
Even though the quarter recorded negative 64,481 square feet of net absorption, the North Peninsula industrial market stayed afloat as the demand for industrial space continued, especially with the boom of the ecommerce sector as a result of the pandemic. In fact, net absorption for the North Peninsula market would have recorded positive 64,148 square feet overall if the South San Francisco market, which posted negative 128,629 square feet, was omitted from the numbers. Overall vacancy for the quarter was recorded at 5.1%, up from 4.7% in the previous quarter. The overall average rate increased slightly to $1.62/SF NNN, up from $1.61/SF in the previous quarter. Despite the potential for elevated demand for industrial space, the North Peninsula market is characterized by the same constituent it has maintained for several years, which is low vacancy and no new construction projects for the foreseeable future. Development of industrial space on the market continues to consist of demolishment of existing outdated buildings or the converting of sites to residential, office and R&D. The long-term demand for industrial and warehouse space is strong, with ecommerce remaining as the major driver.
Download North Peninsula Industrial Market 2Q20