Not surprisingly from the flurry of deals related to industrial uses in the North Bay in recent months, industrial space had the biggest improvement in vacancy in the North Bay in the fourth quarter.
[caption id="attachment_88138" align="alignleft" width="320"] Sonoma County commercial real estate vacancy, fourth quarter 2011--2013 (source: Keegan & Coppin; click to enlarge)[/caption]
In Sonoma County, 10.0 percent of 24.2 million square feet of industrial space was available for lease at the end of last year, according to estimates from Keegan & Coppin Co. Inc./ONCOR International. That's down from 12.3 percent at the end of 2012 and 13.7 percent a year before that. Industrial vacancy in the third quarter last year was 10.4 percent.
[caption id="attachment_88137" align="alignright" width="320"] Marin County commercial real estate vacancy, fourth quarter 2011--2013 (source: Keegan & Coppin; click to enlarge)[/caption]
In Marin County, where little industrial space has been built in years because of the cost, 4.9 percent of 6.44 million square feet was available in the fourth quarter, down from 6.9 percent at the end of 2012 and 7.8 percent a year prior.
Industrial vacancy plunged faster in Solano and Napa counties, filling up projects under construction and spurring others long moth-balled.
"2013 was one of the strongest years in recent memory for the industrial market in Solano and Napa counties," according to Rob Gerard, research director in the Fairfield office of Colliers International.
The industrial vacancy rate for the 46.35 million square feet of industrial space in both counties, 29.3 million of which is for warehousing, was 7.5 percent in the fourth quarter, down 3.7 percentage points for the year, according to Colliers. The large industrial parks of southern Napa Valley have vacancy rates of 2 percent or less.
Key to that movement were the 330,000-square-foot and 473,000-square-foot leases by Encore Glass and Saxco International, respectively, at the under-construction Solano Logistics Center on the southeast outskirts of Fairfield and the sale of the 365,000-square-foot Dey Labs campus in south Napa to the county of Napa, though about 150,000 square feet of that will be for lease.
Vacancy rates for office space in Sonoma, Marin, Solano and Napa counties remained around 20 percent or above in the fourth quarter, according to the brokerages.
Dipping below that threshold again was Marin, reaching 19.5 percent at the end of 2013, according to multiple brokerages.
Of the 700,000 in Marin office leases last year, net absorption was just 78,000 square feet, according to Haden Ongaro, who oversees the North Bay offices of Cornish & Carey Commercial Newmark Knight Frank.
"It was somewhat musical chairs and subleasing space, but there was more activity in volume than in a few years," he said.
A lack of new construction and a well-educated workforce are attracting office property investors, he said.
"There are a lot of major deals in the market, with new investors coming into Marin," Mr. Ongaro said. "In many cases, they are putting in capital and improving buildings. Hopefully, the new buyers will help push up rental rates."
Chipping away at those vacancy rates will be the forthcoming purchase of San Rafael Corporate Center by Novato-based BioMarin Pharmaceutical, which also plans to build a laboratory building there.***
Mark Koenig, who has been brokering larger-sized retail leases and sales in the North Bay for two decades, in early February moved his affiliation to San Rafael-based Meridian Commercial from the San Rafael office of Cassidy Turley.