Office vacancy rose from 29.3% to 29.5% on 41,000 sf of negative net absorption, according to Colliers. The average asking rental rate for San Mateo County fell $0.03 during the quarter to $2.18 per sf per month.
Although the market continues to give back space, the rate at which it is returning to the market has slowed. According to Colliers, negative net absorption through the first half of the year was about 240,000 sf.
Colliers San Mateo research analyst Jeff Dizon says leasing activity has stagnated along with local job growth which, given the number of midlevel professional jobs moving offshore, may continue to struggle. "It may well be that demand for big blocks of space will continue to drop as the paradigm shifts in the global job market," says Dizon.
The central part of the county continued to outperform the northern and southern submarkets. Vacancy in San Mateo, Foster City and Redwood Shores fell from 25.9% at midyear to 25% percent at the end of the third quarter.
"We expect rental rates to remain flat through the end of the year, as landlords will continue to compete for tenants based on the intrinsic qualities of the their buildings and location," says Colliers San Mateo managing director David Chavez. "Contrary to past trends, the central part of the county may continue as a stronger market as activity in this submarket appears more brisk."
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