‘One million square feet of potential office deals …in greater North Bay’After being hit hard by the housing crash of 2006 and double-whammy of economic recession and financial markets collapse of 2008, more North Bay commercial real estate markets appeared to be coming off the bottom of the market in 2010 and headed toward stabilization in 2011, according to market experts.
Keegan & Coppin Vice President Jim Keegan Jr. said that he expects the deals in the works for the opening month of this year to carry the momentum that built at the end of last year.
"This is going to be a good year," he said.
The most movement at year-end came from Petaluma's very high office vacancy rate. The 36.8 percent third-quarter rate decreased to 33.8 percent at the end of 2010, mostly because of nearly 100,000 square feet of sublease space coming off the market during that time, according to Keegan & Coppin.
Key to that were two fourth-quarter leases totaling 46,000 square feet of leases that filled two floors of Cornerstone Properties' largest Petaluma office building.
Cassidy Turley BT Commercial's weekly tally of tenants ready to deal has 25 percent more companies now than at the beginning of 2010, Konrad Knutsen, director of research for Cassidy Turley BT Commercial.
"We track active requirements in the marketplace and are currently aware of just under one million square feet of potential office deals that could land in the greater North Bay marketplace over the next 12 to 24 months," Ms. Konrad Knutsen said.
The arrival of Cornerstone, a commercial property turnaround specialist, as owner of five former Cisco Systems buildings at the north end of Petaluma has led to a negotiations war between owners of newer top-quality office space in the cities, namely RNM Properties at the south end and Basin Street Properties, according to experts in the market.
Also in the lower-cost mix are several new and older Redwood Business Park office buildings formerly owned by Equity Office Properties and now being marketed for quick lease and sale by special servicers.
Employment data for North Bay still show a lack of employment on par with the high levels of this time last year. Slight year-over-year job growth in Sonoma County in the fourth quarter, the first in three years, bodes well for improvement of overall demand for office real estate. However, belt tightening among local governments, such as the potential loss of 500 County of Sonoma positions later this year, could be a drag on that demand.
Ms. Knutson said the Marin and Sonoma office market should stabilize in the first half of this year, barring such major adjustments. The second half could bring "very slow" growth in demand, but rents largely won't increase until next year.
Keller Supply Co. made its first move into the San Francisco Bay area with a facility set to open at 210 Classic Court in Rohnert Park by March 1.
The 65-year-old Seattle-based pool and plumbing products wholesaler signed a three-year, seven-month lease with Rohnert Park Investors TIC for 23,788 square feet of warehouse with 3,000 square feet of office space.