Marcus & Millichap has released its fourth quarter forecast for the industrial market in San Francisco. This quarter it predicts that the vacancy rate will increase 70 basis points to 6.5%.

The increase in vacancy is likely related to an active construction pipeline. The report also anticipates that new construction deliveries will total 1 million square feet in the fourth quarter, an increase of 1.5%. As a result, rental rates are also up, climbing 5.4% to $26.98 per square foot. While the growth rate has fallen from 2017 and 2018, the rental rate has steadily grown over the last five years, even through 2020.

Dermody Properties newest project is among the new construction projects planned. The firm acquired a 49-acre land site in Fairfield, a city in the North Bay and plans to build a 700,000-square-foot, five-building industrial facility on the site. The project will break ground this year, and it will deliver in the third quarter of 2022.