The negative absorption is a little misleading, however, as it mainly was caused by large spaces that came available in Pleasanton and San Ramon, the only two submarkets to post negative net absorption. Some 300,000 sf became available in the Schwab-leased Pleasanton Corporate Commons and 108,000 sf became available at ADP Plaza in San Ramon. As a result, the overall market saw 23,297 sf of negative absorption.
If the Schwab space is taken out of the equation, the Tri-Valley experienced a 17% decrease in the amount of sublease availability, according to the report. The reason can be seen in the rates. Go Beam subleased 18,000 sf in Pleasanton at $1.20 per sf per month, full service, and Massiee Research Labs leased space in Pleasanton at $1.00 per sf per month, modified gross.
"This has forced those marketing direct space to reduce rates and compete with sublessors," states the report. "Most landlords are now opting to forego future deals at better rates in favor of leasing space in the short term; the result is continued downward pressure on rents."
Despite that, activity remains sluggish, as the majority of larger corporate users are remaining focused on their core business and reducing expenses, according to the report. One of the few large corporate users in the marketplace as of late, Ross Stores Inc. last week signed an 11-year, 150,000-sf headquarters sublease at CarrAmerica Corporate Center in Pleasanton, keeping the 1.1-million-sf park 100% leased. Ross will vacate its owned headquarters and distribution facility in Newark, CA to occupy the space in the summer of 2004.
The space is master leased by PeopleSoft and subleased to Commerce One, with the master lease running through 2004. Since Commerce One was seeking a sublease tenant of its own, Ross Stores will be subleasing the space from Commerce One and PeopleSoft for about a year, at which point a 10-year lease with CarrAmerica commences.
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