By Haden Ongaro, Senior Vice President and Manager, Cornish & Carey Commercial Newmark Knight Frank
The rough ride endured by the Marin County commercial market in the late part of the decade got smoother in 2010. This trend continues in 2011.
The outlook for 2011 is brighter than the past two years. Business and public leaders are active in the Marin Economic Forum to stimulate Marin job growth. Local medical, biotechnology and software companies dominated 2010 office leasing and are expected to be active players again in 2011.
External indicators are strong. Silicon Valley drives Bay Area economics, and a stunning 14 million square feet of lease requirements are currently active there. When a pebble drops into the Silicon Valley pond, the ripples are felt around the Bay Area.
Several large employers made major commitments to Marin through lease renewals and expansions. In the past year, San Rafael-based Autodesk extended leases at its 110,000-square-foot headquarters, 111 McInnis Pkwy., 23,000 square feet at 1 McInnis Parkway and 75,000 square feet at 4040 Civic Center Drive. With lease terms ranging from five to ten years, we can expect Autodesk to be a major employer in Marin for some years to come.
In Novato, 124,600-square-foot former GreenPoint Mortgage headquarters at 100 Wood Hollow went from completely vacant in 2010 to 70 percent leased, led by BioMarin Pharmaceutical in 40,000 square feet. Also there are California Service Bureau, Quadrant Data Systems and a soon-to-be-announced insurance company.
Reduced rents made 100 Wood Hollow attractive to tenants who can now afford to upgrade from class B and C buildings into class A space. “Flight to quality” occurred in several other buildings.
Barker Pacific Group and Rockwood Capital’s Rowland Plaza at 75-88 Rowland Way in Novato has enjoyed considerable success. It was 69 percent leased when purchased in September 2009 and likely will reach full occupancy in the first quarter of 2011. Since the beginning of 2010, the owners have brought eight new tenants into almost 40,000 square feet. In addition, four tenants renewed or expanded into another 24,000 square feet.
The property was approved for medical offices and will have leased 40,000 square feet to medical tenants by this year.
Not all news coming out of Novato in 2010 was positive. Image Movers Digital, a Disney-related company, decided to close its 120,000-square-foot motion-capture facility at Hamilton Landing. This departure not only added significant sublease space to the market, but also eliminated a major employer.
In San Rafael, the big news other than Autodesk’s lease renewals is the county of Marin’s interest in a portion of the south building at Marin Commons. This transaction, if consummated, would result in significant positive net absorption in north San Rafael.
In the southern part of the county, Prima Medical Group and Marin General Hospital each leased large spaces at Drakes Landing Office Center in Greenbrae. Increased asking rents at both Drakes Landing and Wood Island Office Center in Larkspur are a positive sign for the entire market.
Sales activity remains slow. Notable sales were of vacant buildings to users, including 189 Sir Francis Drake Blvd. in Greenbrae for $4.9 million, or $489 per square foot, and 22 Pelican Way in San Rafael for $3.3 million, or $97.75 a square foot.
There weren’t any major Marin investment deals in 2010. In 2011, two major office investment properties have come to market, 4040 Civic Center and Fireman’s Fund Insurance’s 710,000-square-foot Novato headquarters.
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