The improving business climate in Silicon Valley and San Francisco may soon flow across the Golden Gate Bridge to southern Marin, as it has in past economic cycles.
The top-quality office space market in southern and central Marin, the typical starting point for growing companies, are at or below the stable market benchmark of 10 percent vacancy, and the market for class B space in northern Marin is below that same benchmark, according to Whitney Strotz, manager of Cassidy Turley BT Commercial's San Rafael office.
At 18.2 percent in the third quarter of this year, the countywide office vacancy rate is still high, but it decreased for four straight quarters from 21.8 percent a year ago.
In Marin County, the unemployment rate was 7.8 percent in August, still the lowest in California.
Encouraging signs are Autodesk's renewal of major leases for its San Rafael headquarters and outlying buildings and Equity Office's ability to fill its Larkspur office properties and bring rents upward, according to Haden Ongaro, who oversees Cornish & Carey Commercial Newmark Knight Frank's North Bay offices.
In Novato, the gamble to get Rowland Plaza approved for medical offices paid off with near full leasing and is in the final stages of sale, according to Mr. Ongaro.
A group led by Barker Pacific Group, lead redeveloper of Hamilton Landing also in Novato, acquired the 60 percent-occupied property in 2009 for $120 a square foot and started marketing it this summer for $250 a square foot, according to other industry sources.
Elsewhere in Novato, the long vacant Wood Hollow property is has now 80,000 square feet of tenants, led by rapidly expanding BioMarin Pharmaceutical of Novato, and has prospects for another 20,000 square feet. Though the two renovated Hamilton Landing hangars ImageMovers Digital planned to occupy remain vacant, the 120,000 square feet currently is leased through 2013.
The county has had four quarters of positive net absorption as of the third quarter, according to Mr. Whitney.
"We are on pace for best net absorption in the last decade," he said.
The county office market has absorbed just over 197,000 square feet of previously vacant space so far this year, as much as for all of 2010, according to Garrick Brown, Northern California research director for Cassidy Turley BT.
Last year, occupancy growth eked out less than 5,000 square feet, and the office market had losses totaling more than 500,000 square feet in 2008 and 2009.
This activity is attracting investors in leased properties, according to Mr. Ongaro. In addition to Rowland Plaza, several other net-leased properties are on the market, not including the 165,000 to 300,000 square feet of Marin Commons in San Rafael the county of Marin is considering for purchase, perhaps by year end.
"That's a lot for our little market," Mr. Ongaro said.
As for Marin's relatively small industrial market, the vacancy rate actually increased to 7.6 percent from 6.7 percent. Some industrial users have wound down operations, such as Win-Dixie, or have relocated warehousing to Petaluma, such as Natural Comfort, Torn Ranch and Dharma Trading.