North Marin County office real estate sale boom returns
Between June 2014 and February 2016, 37 percent of our north Marin County class A office inventory transferred to new ownership — over 46 percent if the former Fireman’s Fund Insurance Company campus is excluded from the inventory.
In the past 12 months, several of those buildings sold again. The two-building office complex at 75–88 Rowland Way in Novato sold in June 2015 for $24.9 million, or $174 per square foot, and sold again in August of last year for $36.75 million ($256).
At 7250 Redwood Blvd., also in Novato, it sold in July 2015 for $16.25 million ($182) then again in October 2018 for $25 million ($279).
In north San Rafael, 1050 Northgate Drive sold in November 2014 for $14.1 million ($263) then again last August at a 40 percent increase: $19.725 million ($368). At the time of this writing, 4040 Civic Center Drive is on the market for sale and expected to achieve a new all-time high price per square foot for north Marin.
Clearly, investors still see opportunities for rent growth in north Marin. While some rents in southern Marin are at or above $6 per square foot, fully serviced, the bulk of class A inventory in northern Marin is $2.75–$3.50.
Several northern Marin office buildings have just completed significant renovations. At 4000 Civic Center in Terra Linda, it has a new exterior, landscaping and soon-to-be-completed outside sport-lounge area.
The buildings at 100 Wood Hollow Drive in Novato just completed an extensive lobby renovation and is getting an outdoor putting green to complement the existing bocce court.
Other north Marin office buildings have had existing dated improvements in available spaces demolished to make them easier to show to prospects. An example is 1 Thorndale Drive above the Northgate Mall in San Rafael.
A few major tenants relocated or closed their doors in late 2018, affecting the north Marin vacancy rate. The now vacant former Fireman’s Fund campus adds over 700,000 square foot to our available office inventory. Telltale Games closed its doors late last year, leaving 60,000 square feet vacant in north San Rafael. Fair Isaac downsized, leaving a large block of space at 200 Smith Ranch Road, also in north San Rafael.
But several large lease deals in progress or just completed in north Marin will reduce current vacancy rates by mid-year.
Numerous factors point to an optimistic outlook for north Marin office buildings, which are some of the highest-quality buildings in the market. Those reduced alternatives in southern Marin, where rents are roughly twice that of north Marin alternatives. New ownership of several key buildings brings fresh ideas and strategies, not to mention a higher cost basis, that have led to recent renovations at several of the larger class A office buildings.
These factors are likely to put strong upward pressure on north Marin office rents.
Executive Vice President Haden Ongaro leads Newmark Knight Frank’s North Bay operations.