Commercial space market to see pockets of tightening in 2013

[caption id="attachment_67178" align="alignright" width="376"] Chris Neeb, Haden Ongaro, Al Coppin[/caption]

Though the amount of office and industrial real estate available for lease remained at relatively high levels in 2012, the need for certain types of space could drive build-to-suit office projects in Sonoma County, distribution warehouses in Napa County and smaller office suites in large Marin County spaces.

Health care, medical-device, other technology developers and services for the booming wine and tourism industries have been driving demand for Sonoma County office and industrial space, according to Al Coppin, president of Keegan & Coppin/ONCOR International.

Though countywide vacancy rates were around 22 percent for office space and 13 percent for industrial options in the third quarter, down three-quarters of a point from a year before, companies looking for more than 10,000 square feet of top-class office space have relatively few options in the county.

"Most of the vacancy factor is in functionally deficient buildings," Mr. Coppin said. "A small inventory of buildings have been built in the last 10 years. There will be more build-to-suits going forward from companies looking for quality space."

High vacancy rates and aggressive competition for tenants in the past several years years spurred what many agents call a "flight to quality." Upon lease renewals, a number of companies have been opting for as much or more nicer-quality space or taking available of what low-interest-rate money is available to own space instead of rent.

Such build-to-suit activity in the works now includes American AgCredit's planned 50,000-square-foot headquarters on land it purchased from Airport Business Center, Wine Country Shipping's forthcoming 31,000-square-foot expansion via Airport Business Center in Windsor and talks for tens of thousands of medical office space in southwest Santa Rosa.Napa harvests demand for warehouses

Pent-up demand for large-sized warehouse and distribution space in southern Napa Valley spurred a flurry of deal-making in 2012, according to Chris Neeb of Cushman & Wakefield.

"Space options in south Napa and American Canyon are getting very tight if you're looking for more than 50,000 square feet," Mr. Neeb said.

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