San Francisco’s Vacancy Decreases for the 12th Consecutive Quarter to 3.1%
Source: CoStar
The San Francisco Industrial market ended the second quarter 2015 with a vacancy rate of 3.1%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 307,426 square feet in the second quarter. Vacant sublease space decreased in the quarter, end- ing the quarter at 306,979 square feet. Rental rates ended the second quarter at $17.26, an increase over the previous quarter. There was 293,100 square feet still under construction at the end of the quarter.
Absorption
Net absorption for the overall San Francisco Industrial market was positive 307,426 square feet in the second quarter
2015. That compares to positive 120,002 square feet in the first quarter 2015, positive 266,214 square feet in the fourth quarter
2014, and negative (22,710) square feet in the third quarter 2014.
The Flex building market recorded net absorption of posi- tive 178,179 square feet in the second quarter 2015, compared to positive 33,684 square feet in the first quarter 2015, positive 125,780 in the fourth quarter 2014, and positive 140,779 in the third quarter 2014.
The Warehouse building market recorded net absorp- tion of positive 129,247 square feet in the second quarter 2015 compared to positive 86,318 square feet in the first quarter 2015, positive 140,434 in the fourth quarter 2014, and negative (163,489) in the third quarter 2014.
Vacancy
The Industrial vacancy rate in the San Francisco market area decreased to 3.1% at the end of the second quarter 2015. The vacancy rate remained at 3.7% at the end of the first quarter 2015 compared to the previous quarter, and 4.0% at the end of the third quarter 2014.
Flex projects reported a vacancy rate of 4.4% at the end of the second quarter 2015, remained at 5.3% at the end of the first quarter 2015 compared to the previous quarter, and 5.8% at the end of the third quarter 2014.
Warehouse projects reported a vacancy rate of 2.7% at the end of the second quarter 2015, 3.2% at the end of first quarter 2015, 3.1% at the end of the fourth quarter 2014, and 3.3% at the end of the third quarter 2014.
Sublease Vacancy
The amount of vacant sublease space in the San Francisco market decreased to 306,979 square feet by the end of the second quarter 2015, from 333,754 square feet at the end of the first quarter 2015. There was 285,144 square feet vacant at the end of the fourth quarter 2014 and 290,380 square feet at the end of the third quarter 2014.
San Francisco’s Flex projects reported vacant sublease space of 164,850 square feet at the end of second quarter 2015, down from the 186,108 square feet reported at the end of the first quarter 2015. There were 208,699 square feet of sublease space vacant at the end of the fourth quarter 2014, and 91,366 square feet at the end of the third quarter 2014.
Warehouse projects reported decreased vacant sublease space from the first quarter 2015 to the second quarter 2015. Sublease vacancy went from 147,646 square feet to 142,129 square feet during that time. There was 76,445 square feet at the end of the fourth quarter 2014, and 199,014 square feet at the end of the third quarter 2014.
Rental Rates
The average quoted asking rental rate for available Industrial space was $17.26 per square foot per year at the end of the second quarter 2015 in the San Francisco market area. This represented a 5.4% increase in quoted rental rates from the end of the first quarter 2015, when rents were reported at $16.38 per square foot.
The average quoted rate within the Flex sector was $27.89 per square foot at the end of the second quarter 2015, while Warehouse rates stood at $13.03. At the end of the first quarter 2015, Flex rates were $26.53 per square foot, and Warehouse rates were $12.20.