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SAN FRANCISCO-A few days ago, we ran a national story pointing out that office vacancy rates declined or held steady in most major US markets during Q1 2013, according to preliminary data from CBRE Group Inc. Six of the 12 largest markets showed declines in office vacancy, while two remained stable. One of the leaders in those declines was San Francisco.
According to CBRE, San Francisco had the second-biggest decrease, with a 40 bps decline. However, asking rates did rise in the market, according to the firm, due to heightened leasing activity in combination with constrained supply.”
Colin Yasukochi, CBRE director of research and analysis in Northern California, tells GlobeSt.com that “the San Francisco office market trend of tightening vacancies and rising rents continued in the first quarter of 2013.” He also points out that “Leasing activity did slow compared to the same quarter a year ago as did the rate of rent increase.”
According to Yasukochi, “With new construction deliveries and starts expected to rise over the next 12 months, more space choices will become available.”
For Southern California, Gary Baragona, director of research and analysis in the Downtown L.A. office of CBRE, tells GlobeSt.com that the L.A. office market started the year slowly, posting relatively flat numbers across the board. “At the end of the first quarter 2013, the market experienced lower levels of leasing activity resulting in an uptick in the vacancy rate and a slight drop in rents,” he says. “However, tenant demand is expected to improve throughout the year with the suburban office markets leading the way, especially on the Westside due to their strong concentration of technology and entertainment companies.”
On the industrial side, for the past couple years, the Southern California industrial markets experienced some of the lowest vacancy and availability rates in the country, notes Baragona. “As a result, the region has experienced a boost in development activity with more than 11.9 million square feet currently under construction and another 7.9 million square feet ready to break ground in the near-term.”
To learn more, check out the charts from CBRE below. And check back in a few days for more from Colin Yasukochi on large blocks of space and San Francisco cap rates.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
