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Q1 Report: Peninsula Office Market Flat

SAN FRANCISCO-Net absorption for the first quarter was barely positive for the office market, keeping the average direct vacancy.

By Brian K. Miller | Updated on April 01, 2008

SAN FRANCISCO-The 42.8 million-sf Peninsula office market that runs between San Francisco and the Silicon Valley was flat through the first three months of the year on an overall basis. CB Richard Ellis is reporting that net absorption for the first quarter was nominally positive, resulting in direct vacancy rate of 9.0% and an overall vacancy rate (including sublease space) of 11.2%.

The overall Peninsula office market experienced 20,340 sf of positive absorption in the quarter. The top performer was the 3.5 million-sf Foster City submarket, which posted 103,567 sf of positive net absorption to lower its direct vacancy rate to 1.5% and its overall vacancy rate (including sublease space) to 2.7%, according to the report. The average asking lease rate in Foster City is $4.22 per sf per month, within a couple of pennies of the weighted average market-wide.

The worst performer in the quarter was the 10 million-sf Redwood Shores/Redwood City submarket, which posted 91,000 sf of negative net absorption, raising its direct vacancy rate to 10.4% and its overall vacancy rate to 14.4%. The weighted average asking lease rate there is just under $3.98 per sf per month. Both Foster City and Redwood Shores located in central portion of the Peninsula.

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