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North Bay Business Journal

Monday, February 6, 2012, 7:22 pm

Report: Napa-Solano commercial real estate stabilizes

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    FAIRFIELD — Industrial real estate vacancy in Napa and Solano counties fell 1.4 percentage points in 2011, but immediate availability of office space in the two counties increased a percentage point over the year to even higher levels, according to reports released today.

    After two consecutive quarters of the industrial vacancy rate remaining steady in the mid 12 percent range, it appears the industrial market may be stabilizing and there is optimism for 2012, according to fourth-quarter market reports from Colliers International’s Fairfield office. Though nearly 60,000 square feet more industrial space came off the market than became available in the fourth quarter, companies put 570,000 more square feet on the market than leased or purchased it in all of 2011.

    The Napa-Solano industrial vacancy rate at the end of 2011 was virtually unchanged at 12.7 percent, just one-10th of a percentage point increase from the third-quarter rate. Of Napa County’s 12.2 million square feet of industrial space, the vacancy rate was 9.3 percent in the fourth quarter. 

    The fourth-quarter office vacancy rate rose two-10ths of a percentage point to 23.6 percent for the two counties. This represents a 1.0 percentage point increase from the end of 2010. However, asking rents continue to fall.

    Yet the Napa-Solano office vacancy rate has been between 22 percent and 24 percent for six consecutive quarters, perhaps pointing to an end to companies shedding significant amounts of space, according to Colliers. More than 8,000 square feet more space came off the markets in the two counties in the fourth quarter than came on, and net absorption for 2011 was about 41,000 square feet.

    “One positive sign in the office marketplace is unemployment rates have declined from their historically high levels of the past few years,” according to the office statement, which also noted “limited activity” in the market at year end.

    Solano County’s jobless rate declined to 10.5 percent in December from 12.0 percent a year before. The unemployment rate in Napa County was 9.0 percent in December, up from a revised 8.7 percent in November but well below the year-ago estimate of 10.7 percent.

    “Typically, declining unemployment rates lead to declining vacancy rates,” the Colliers report said. “However, this has not yet taken place as many businesses remain cautious with regards to expansion as there is still lingering economic uncertainty and fear of risk.”

    Colliers cited a recent report issued by Reynders, McVeigh Capital Management that predicts a comeback for manufacturing 2012. “Homeshoring” of production from Asia is a big factor, led by a shrinking wage gap between the U.S. and China and fueled by dramatically increasing transportation costs. The Reynders report notes U.S. and local market strengths in natural resources, especially water, and technological innovations.

    Colliers noted North Bay strength in the food and beverage industries. The food industry in Solano County accounts for nearly $1.0 billion in economic output annually, amounting to about 10 percent of Solano County’s gross county product. In Napa County, the wine industry has weathered the recession by pricing reductions which led to an increase in sales volume despite the sluggish economy. The long term outlook for the wine industry remains strong as consumers’ tastes are expected to continue to shift towards wine and consumer spending is expected to increase as the economy recovers.

    Industrial

    Solano County Base (s.f.) Vacant (s.f.) Vacancy
    Benicia 8,424,263 1,625,405 19.3%
    Dixon 2,289,975 221,388 9.7%
    Farifield 11,859,670 1,137,586 9.6%
    Suisun City 236,713 55,045 23.3%
    Vacaville 6,370,709 1,129,312 17.7%
    Vallejo 709,403 56,214 7.9%
    Total 29,890,733 4,224,950 14.1%
    Napa County
    American Canyon 6,361,109 318,890 5.0%
    Napa 5,879,066 817,004 13.9%
    Total 12,240,175 1,135,894 9.3%

    Office

    Solano County
    Benicia 140,105 370 0.3%
    Fairfield 1,910,993 541,989 28.4%
    Suisun City 142,752 42,278 29.6%
    Vacaville 513,761 135,505 26.4%
    Vallejo 234,065 14,598 6.2%
    Total 2,941,676 734,740 25.0%
    Napa County
    American Canyon 62,104 11,423 18.4%
    Napa 1,452,773 304,223 20.9%
    Total 1,514,877 315,646 20.8%

    Source: Colliers International. Note: Vallejo figures don’t include Lennar Mare Island.

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    Comments

    1 Comment

    1. February 8, 2012, 9:29 am

      by Louisville KY Homes for Sale

      It’s great to see that the unemployment rate is decreasing across the country. But I do think that companies should be cautious and take time to build back up their companies or wait to start new companies after the economy has become more steady.


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