ROHNERT PARK, CA—Job growth in the counties of San Francisco/San Mateo and in the North Bay region continued to rise in the second quarter of 2017, and the unemployment rate fell to the lowest level since 1999. According to the California Employment Development Department, the unemployment rates in San Mateo, Marin and San Francisco counties continued to be the lowest three in the state at 2.4%, 2.6% and 2.7%, respectively. The total regional unemployment rate in North Bay (Marin, Napa, Sonoma and Solano counties) was 3.4% in the second quarter of 2017, falling -70 basis points from 4.1% last year. Employment in the San Francisco/San Mateo/North Bay Region now stands in excess of 1.6 million.

In the second quarter of 2017, shopping center vacancy throughout San Francisco/San Mateo/North Bay was recorded at 5.3%, according to Cushman & Wakefield's latest retail report of second quarter. It was up +80 bps from last quarter's figure of 4.5% and +100 bps from 4.3% rate one year ago. San Mateo County had the lowest vacancy rate of 1.9%. Three of the four counties in the North Bay continued to maintain the vacancy rates below 5%: Napa County (2.7%), Marin County (3.2%) and Sonoma County (4.1%). Only Solano County had a higher vacancy rate of 10.3%.

By center type, the vacancy rates at the end of the second quarter of 2017 were the following: for strip centers it was 3.2%; power and regional shopping centers reported 3.5% vacancy; neighborhood and community centers had a 5.6% rate; and with the new delivery of one center in San Francisco, which had not been occupied, the overall vacancy rate of lifestyle centers in the region increased to 32.8%. Negative net absorption of -50,000 square feet was recorded in the second quarter. Neighborhood and community centers contributed to the most negative absorption of -52,000 square feet. Of the roughly 40.8 million square feet of shopping center inventory that Cushman & Wakefield tracks in the region, approximately 2.1 million square feet of space was available as of the end of the second quarter. In addition, there is 52,000 square feet of new shopping center space currently under construction in the region.