By Haden Ongaro, Cornish & Carey Commercial Newmark Knight Frank
MARIN COUNTY — Central and northern Marin office space markets have strengthened significantly in the past 12 months, with vacancy rates finally dipping below 20 percent for the county.
Central Marin office vacancy at 4 percent was the lowest in the county, and corresponding asking rent grew more than 6 percent over the fourth quarter of 2010.
Several key transactions in 2012 point to further tightening in the market and increasing asking lease rates. The county of Marin purchased the south building at Marin Commons with 300,000 square feet, which removes a big chunk of inventory from the market. BioMarin Pharmaceutical leased 120,000 square feet at San Rafael Corporate Center, which not only fills a large vacancy but also will have a huge impact on downtown San Rafael merchants as more than 500 employees come to the area.
Lucasfilm affiliate Skywalker Properties received unanimous approval from the Marin County Planning Commission to build a 270,000-square-foot production center at Grady Ranch northwest of San Rafael, projected to add 690 jobs. A former Industrial Light & Magic building at 3210 Kerner Blvd. in San Rafael was leased to 32Ten Studios, continuing production facility for feature films and commercials in the 30,000 square feet facility.
As the Bay Area commercial real estate market continues to tighten, Marin stills provides options for large blocks of space. Palo Alto’s vacancy rate is now less than 7 percent with some areas having monthly asking lease rates of more than $6 a square foot on a triple-net basis. More than 1.5 million square feet of leases where signed in San Francisco in the last 60 days and only a handful of buildings are able to accommodate a 100,000-square-foot tenant.
In central and northern Marin, there are still several options for 100,000-square-foot tenants including ImageMovers Digital’s 120,000-square-foot vacant leasehold at Hamilton Landing in Novato and space in one to two buildings of Fireman’s Fund Insurance’s headquarters campus also in that city.
There will be outward migration from San Francisco as that market tightens. Our office has completed seven transactions in the past 90 days with San Francisco tenants, a trend we hope will continue.
Lease rates have increased in central Marin. With recent activity, asking rents will increase in northern Marin market in 2012. A revitalized film-production industry should attract new companies to Marin to help further decrease office vacancy. Local medical tenants continue to grow and absorb office space.
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