Napa copes with office-space crunch
Napa’s plan to build a new City Hall on existing property and relocate staff to temporary space during construction comes as available office space downtown is at a premium.
The City Council on May 30 picked a proposal from Los Angeles-based Plenary Group for a 4-story civic center, 250-room hotel, 60-plus residential units, 11,000-square-foot grocery store and a 6-story expansion to the Clay Street parking garage. Details will be hashed out in months to come, but the proposed timeline calls for construction to start next year and wrap by early 2020.
In the meantime, workers from the current City Hall and surrounding office buildings would shift to temporary quarters, called swing space, until the new facility would be ready to occupy. How much space will be needed is still being worked out, according to city officials. Local real estate experts estimate it could be tens of thousands of square feet of office space.
But as it is, the office vacancy rate in Napa city limits is estimated to be under 5 percent, less than half what’s considered to be a balanced market of landlord supply for tenant demand.
“There’s scarcity of inventory in all segments in commercial (real estate) right now,” said Michael Moffett of Coldwell Banker Commercial Brokers of the Valley. “It’s slim pickin’s and very much a landlord market.”
And such lack of options, called “tightness” in a market, is reflected in rising rents property owners are asking for, Moffett said. The longtime rate for nicer space of $2.50 a square foot per month for full-service accommodations is now in the $2.70–$3 range.
“The interim space they are going to need will be tough to find, because of the tightness of the market,” Moffett said. “And it will be hard to be considered by landlords for a two- or three-year lease, knowing they will be gone. They may have to move people into county business parks to get that done.”
There is roughly twice the office-space availability in the business parks around Napa County Airport south of the city. The first-quarter vacancy rate was estimated to be 8.8 percent of 2.79 million square feet by Keegan & Coppin Co. Inc./Oncor International and 9.7 percent of 1.67 million square feet by Colliers International.
Reasons for the tightness of the Napa office market includes a lack of new construction since the economic recession nearly a decade ago and a rush of local-government workers into temporary space after the August 2014 Napa quake damaged buildings.
The Plenary proposal noted five possible in-town swing-space locations for city workers:
• First American Building, 1700 Second St., with 45,000 square feet available next year.
• Napa County Assessor Building, 1127 First St., 26,000 square feet next year.
• Young Building, 801 Coombs St., 17,000-20,000 square feet this year and next.
• The Wiseman Company’s new 1300 Main Street project, mid-2018.
• Napa County’s former Health & Human Services Department campus, 2344 Old Sonoma Road, this year.
Plenary estimated space available at those locations to be roughly 150,000 square feet between them, some of those locations already are largely spoken for. For example, the First American Building actually has only 1,000 square feet available, according to owner Eric Lehman, whose Lehman & Lehman accounting firm also is in the building.