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Bay Area Pushes Down AMB's Renewal Rates

SAN FRANCISCO-AMB, the locally based industrial REIT with 93 million sf in about 970 buildings, finds industrial rental rates a drag. In a 10Q filed this week, officials say rates and rollovers declined 7.6% in the third quarter, thanks to rent roll-downs in the Bay Area.

By Brian K. Miller | Updated on November 09, 2005

(To read more on the industrial market, click here.)

SAN FRANCISCO-The Bay Area is a drag. That according to locally based industrial REIT AMB Property Corp., which reports in its 10Q this week that rental rates on industrial lease renewals and rollovers in its portfolio declined 7.6% in the third quarter, “primarily” due to rent roll downs in the San Francisco Bay Area. Without the impact of the Bay area, rents on lease renewals and roll downs in the company’s 93-million-sf portfolio would have increased by 0.6% for its hub markets and increased by 1.4% for its total portfolio.

Having said that, the report adds that the company thinks the rents in place in its portfolio are approximately 5% above current market rents. “We believe that relatively high levels of national industrial space availability have caused market rents for industrial properties to decline between 10% and 20% from their peak levels in 2001,” states the report. “This decline in market rents from their 2001 peak levels had a negative impact on our results as 38.1% of the space that rolled over in our portfolio in the third quarter of 2005 had commenced between 1999 and 2001.”

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