Marin County office real estate market improves in Q1
The southern Marin County commercial real estate market (Sausalito, Mill Valley and Tiburon), after taking a large hit on occupancy in the last quarter of 2018, saw a full recovery of that occupancy, and a bit more, in the first quarter of 2019.
The Belvedere Place office complex in Mill Valley became fully leased, with WeWork taking virtually all the remaining space in two different leases. Belvedere Place is now on the market for sale.
The One and Three Harbor Drive office property also improved its occupancy and is also available for sale. There is some room for rental rate increases in Sausalito. Sausalito remaining less expensive for office tenants than central Marin.
The central Marin County market (Corte Madera, Larkspur and Greenbrae) remained tight as usual with a small decrease in vacancy, reflecting it’s role as both the highest priced and lowest vacancy submarket for office space in Marin County.
Lower San Rafael was ambivalent at best, treading water, without significant movement in either direction.
Downtown San Rafael continued to see absorption and increased rental rate for its class A office space, although class B office space continued to languish, neither getting better nor getting worse.
Northern San Rafael saw good positive absorption, with a new large lease to Marin Specialty Surgery Center at 1 Thorndale Drive, but rental rates basically remained flat. The 4000 Civic Center Drive office building is poised to boost its occupancy in the second quarter of 2019.
The Novato market basically tread water in the first quarter, with neither increased absorption nor lower or higher rental rates. There was wide variation from class A and class B office rental rates. Class A office space went up a modest 10 cents per square foot per month. Class B office rental rates stayed flat.
The second quarter of 2019 is expected to show a bit of further market vacancy tightening and perhaps some modest rental rate increases throughout the county. But those increases would be insignificant, compared with the run up of rental rates over the last couple years.
Compared with San Francisco, the Peninsula and even the East Bay — for a change — Marin County has affordable office rental rates. That continues the trend of Marin’s having an unlikely role as a price leader and contributing to the inflow of jobs, though on a fairly modest scale from San Francisco and other Bay Area employment markets.
Sonoma-Marin Area Rail Transit (SMART) continues to play a positive role in bringing some relief to the daily north and south commute, and this should continue to be even more so in the months and years ahead.
Brian Eisberg and David Walwyn are agents affiliated with brokerage Meridian Commercial.