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Monday, October 29, 2012, 5:45 am

Commercial Real Estate Guide 2012: Technology dominates big Marin leases

BioMarin lease at San Rafael Corporate Center; 2k video-game company expands

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    The biggest Marin leases of 2012 have been in high-technology, specifically biotechnology and software, but leasing activity has been slower than in San Francisco.

    Novato-based BioMarin Pharmaceutical (Nasdaq: BMRN) signed a 10-year lease for 120,338 square feet all of 770 Lindaro St. and two floors of 790 Lindaro at San Rafael Corporate Center. The lease with Seagate Properties of San Rafael brought the 318,000 square feet of class A office space in the four existing buildings to 85 percent occupancy. BioMarin relocated a number of employees from its Bel Marin Keys headquarters plant to downtown San Rafael, opening in San Rafael with 300 employees in early September.

    2K, a video-game publishing label of New York-based Take-Two Interactive Software (Nasdaq: TTWO), will expand its 64,000-square-foot Novato headquarters and two development studios by 30 percent by mid-November. 2K already has more than 300 employees filling all of Hangar 10 at the Hamilton Landing office complex in southeast Novato and is actively hiring. The company signed a three-and-a-half-year lease for 19,600 square feet of former Birkenstock space in a part of a second hangar at the Hamilton Landing office complex.

    German-owned footwear maker Birkenstock moved its U.S. marketing office back to 37,000 square feet of offices at its north Novato campus this fall.

    Other gaming software companies have been actively growing in Marin. Santa Monica-based Activision Blizzard (Nasdaq: ATVI) expanded its Novato development studio at Hamilton Landing by about 10,000 square feet to 23,500. The company in 2005 acquired Novato-based game programmer Toys for Bob, started in 1989 by Paul Reiche III and Fred Ford. Another Marin game programmer is said to be preparing to about double in size into 22,000 square feet, according to real estate sources.

    Hamilton Landing enjoyed several 2012 leases, mostly expansions such as 8,000 more square feet for Meritage Medical Network, formerly Marin-Sonoma IPA. Two 64,000-square-foot hangar office buildings, once occupied by Disney’s ImageMovers Digital film company, remain leased into 2016.

    A major block of vacant office space came off the market at the end of 2011. The Marin County Board of Supervisors approved an $81.9 million plan to purchase the 328,000-square-foot mostly vacant 1600 Los Gamos Dr. office building at the two-building Marin Commons complex in north San Rafael and renovate up to 110,000 square feet to accommodate a new county Emergency Operations Facility. The building itself sold for $28.43 million.

    Two other big Marin office property sales in the works in 2012 haven’t happened. Sausalito-based Berg Holdings started marketing the 78,000-square-foot One Thorndale Dr. building in San Rafael as part of 248,000 square feet of office and retail space in Sonoma and Marin counties and continues to look for buyers. Meanwhile, Chicago-based Equity Office in the spring marketed 15 Marin class A office buildings totaling nearly 711,000 square feet for sale but took them off the market by mid-summer.

    The county office vacancy rate was 15.5 percent of 9.84 million square feet of class A and B space in the third quarter, down 1.5 percentage points from the third quarter of 2011, according to brokerage Cassidy Turley.

    In the first three quarters of 2012, 180,600 more square feet of office space was available for lease than spoken for. That’s down sharply from nearly a half-million square feet of positive space absorption in 2011, which was thanks largely to the sale of 328,000 square feet of mostly vacant space at Marin Commons. Yet the year-to-date loss of occupancy was better than a net of 589,000 square feet that became available in 2008–2009. Occupancy change was nil in 2010.

    Class A office vacancy was 23.5 percent of 4.85 million square feet in the third quarter, down from 26.9 percent a year before. Class B vacancy dipped to 8.2 percent 3.58 million square feet from 8.9 percent in that timeframe.

    Marin’s jobless rate, continuing to be the lowest in California for years on end, was 6.3 percent in the third quarter, down from nearly 7.5 percent a year before, according to state figures.

    In Marin industrial real estate, Corte Madera-based personal care packaged goods company EO Products planned to expand its production plant in the East Bay, but a number of public officials and real estate experts came together to convince the 17-year-old company in mid-May to double in size locally by signing a 10-year lease for a 40,000-square-foot vacant Industrial Light & Magic industrial building at 90 Windward Way in San Rafael. The company moved in early October.

    On the flip side, San Rafael-based healthful foods wholesaler Multiple Organics, whose Inc. 5000 profile says its revenue grew 44 percent to $16.5 million from 2007–2010, purchased a 50,000-square-foot Hercules building and plans to relocate in early 2013. Novato-based Biosearch Technologies plans to move its 50,000-square-foot headquarters lab from Novato to Petaluma in early 2013.

    Marin’s industrial space vacancy rate in the third quarter was 7.1 percent of 6.35 million square feet, down barely from 6.8 percent a year before, according to Cassidy Turley. Occupancy growth in the first three quarters of 2012 was just 7,700 square feet. The average age of Marin industrial buildings is 47 years, according to the brokerage.

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