North Marin County office market emerges from pandemic pause

The Marin County office market ended the fourth quarter of 2021 with positive net absorption, the first quarter of net absorption since the pandemic began.

Although a modest gain of 67,000 square feet, this absorption signals the beginning of a turn towards recovery for the office market in the county. Most of the last quarter’s absorption came from deals done in the 2,000-3,5000 square foot range. Class A lease rates in the county’s marquee properties also increased. Another positive sign for the health of the market and recent demand for space of office, industrial and apartment buildings.

The most notable transaction of the past 12 months was the 60-property portfolio sale of office, industrial, and apartment buildings totaling $436.5 million to Hamilton Zanze & Company and Graham Street Realty. The new ownership group is implementing plans for upgrades to several class A and B office buildings in the portfolio.

Meanwhile, owners across the county have continued to upgrade buildings throughout the pandemic to meet the demands of the return to office.

Several of our large life science companies, notably BioMarin and Ultragenyx, have continued to consume space in the market, acquiring properties over the past 12 months.

In general, owner-user purchasing activity increased over the past 12 months across the county. Marin Transit, Sol Food, Higher Ground Education, St. Vincent DePaul, and Chrisad have all purchased buildings during this past year.

Touring and leasing activity have increased in the first quarter of this year. There are several pending leases in the 20,000- to 50,000-square-foot range that will result in positive absorption in the second quarter.

While short-term leases were used as a concession over the past 24 months, lengthier terms are returning. Some of these larger office deals are being structured with 10-year terms.

Owner-user deals and tenants’ signing longer-term leases are strong indications that the Marin office market is improving. And activity this quarter suggests deal size is increasing.

Haden Ongaro (415-526-7676) is executive managing director and North Bay market leader for Newmark.