Area poised to handle anticipated growth
By Shawn Johnson, managing partner, Keegan & Coppin Co., Inc./ONCOR International
The Sonoma County Highway 101 north corridor real estate office market saw a decrease in fourth-quarter vacancy rates in 2013 from 2012, and industrial vacancy there decreased dramatically.
Office vacancy rates decreased to 16.4 percent in the fourth quarter from 17.6 percent a year earlier. Industrial vacancy rates saw the largest decrease, to 5.5 percent in the fourth quarter from 13.4 percent at the end of 2012.
Office rates have remained stagnant. Class A rates ranged from $1.70–$1.95 per square foot, full service, and class B rates ranging from $1.35–$1.50 per square foot, full service.
New airport-area infrastructure
Despite little leasing activity to boast about, the Charles M. Schulz–Sonoma County Airport area continues to receive investment in infrastructure. Reconstruction of the Highway 101 interchange serving the airport is set to be completed this summer. The runway expansion is underway and expected to be completed in November.
Sonic.net is building an all new fiber-optic data network in business parks around Sonoma County Airport. This new network offers gigabit broadband plus business-class hosted PBX phone service in a bundled offering. Gigabit Internet access is one of the fastest Internet connections available, and the cloud-based hosted PBX solution will provide next-generation telephone service to businesses at the Airport business parks.
New projects, tenants
One of the most exciting projects is the planned headquarters expansion for American AgCredit. The project is located at the corner of Aviation and Airport boulevards, one of the last development sites available at the entrance to the airport area. The two-story 120,000-square-foot office project is planned to begin construction this year.
Wright Engineered Plastics expanded operations in relocating to 44,771 square feet of office and manufacturing space at 3663 and 3681 N. Laughlin Rd. Symmetricom relocated its Santa Rosa office from 3750 Westwind Blvd to 1550 Airport Blvd. and leased about 7,304 square feet of office space.
Airport Business Center just completed a 27,000-square-foot build-to-suit building for Wine Country Shipping in Conde Lane Business Park. It’s the latest of four build-to-suit projects developed in the park over the past few years.
Industrial lease rates on a gross basis range from 75 cents to $1 a square foot for higher-quality warehouse manufacturing space to as low as 50–60 cents a square foot for older or larger warehouse spaces, of which few buildings are available. Industrial activity has picked up with the wine industry, but there is a limited supply of smaller wine-storage facilities.
With the economy showing signs of a slow recovery, the forecast for 2014 is cautious. Although interest rates are relatively low, other economic factors are affecting the local economy. Unemployment at year-end 2013 was 6 percent in Sonoma County, which was lower than the statewide rate of 8.5 percent.
Office users have not yet found a need for any significant growth in actual space needs as they have become more efficient in the way they do business. That includes using more open floorspace plans and fewer private offices, which doesn’t help lower vacancy nor put pressure on rents.
Although 2013 was not as expansive as we need, the area is poised to handle the much-anticipated growth we are all hoping for in the near future.
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