North Peninsula Office Market
Following seven consecutive quarters of negative net, the region recorded 49,000 SF of positive absorption to start the year. Market-wide vacancy increased slightly to 18.2% this quarter, up from 18.1% in the previous quarter and 13.0% one year ago. On the sublease front, vacancy counted for 6.1% of the total inventory and 33.3% of the total vacancy this quarter, compared with 6.4% of the total inventory and 36.9% of the total vacancy in the previous quarter. Market-wide availability was recorded at 20.5%, on par with the previous quarter. Increasingly high availability rates in distressed properties have started to soften the office market and drive down rates, demonstrated by the fact that average asking rates decreased or remained stagnant in 11 out of the 12 major submarkets this quarter.
North Peninsula Industrial Market
Market-wide R&D availability increased to 21.2% this quarter, up from 17.4% in the previous quarter. Market-wide R&D vacancy increased to 15.8%, up from 13.1% in the previous quarter. The North Peninsula’s industrial market availability rate increased in the first quarter of 2024 to 5.9%, up from 4.7% in the previous quarter. Market-wide vacancy increased to 3.8%, up from 3.8% in the previous quarter. The region’s R&D pipeline currently stands at 5.6 million SF of under-construction product. Of that notable ground-up construction, 6.8% is already preleased. The industrial construction pipeline remains obsolete.