3rd Quarter Market Update
Rental Rates & Vacancy
The 3rd Quarter of the entire San Francisco Industrial real estate market closed with a decreased vacancy rate of 6.4% (down from 6.7% in the 2nd Quarter 2013). The specific warehouse sector for San Francisco ended the 3rd Quarter with a decreased vacancy rate of 5.1% (from 5.2% in Q2), and marks the 4th consecutive quarter in vacancy decreases. The Flex product type also saw a decrease in vacancy from 11.4% at the end of the 2nd Quarter to 10.4% at the end of the 3rd. As to be expected with shrinking availability, the average industrial rental rates increased by 3% , ending the quarter at $13.84 per square foot annual (up from $13.44 psf., in the 2nd Quarter). The average rate for warehouse real estate product was $10.38 psf. annual, an increase from the Q2 rates of $9.90 psf. 3rd Quarter Flex rates also increased from $22.36 (Q2) to $22.80 psf. annual.
Inventory & Construction
As of the end of the third quarter, the total inventory of industrial properties in the San Francisco market totaled 94,603,773 square feet in 4,805 buildings. The flex market consisted of 24,486,495 square feet in 786 projects, and the warehouse market included 71,117,278 square feet in 4,019 buildings. No new space was completed in the San Francisco commercial real estate marketplace in the 3rd Quarter of 2013. Furthermore, the 3rd Quarter reported no new industrial constructions projects slated for San Francisco proper.
Sales Activity (Second Quarter Activity)
Although year-to-date industrial real estate sales are down for the San Francisco industrial market, the 2nd Quarter saw sales figures increase in terms of dollar value with a total volume of $59,828,500. The sales volume represents 8 buildings and an average price per square foot of $177.26. 2013 cap rates are recording lower than 2012, and are average 5.82% versus 6.98%, respectively.
If you need help making sense of these numbers and what they mean for you as a Tenant, Owner or Investor in the San Francisco commercial real estate marketplace, call Calco Commercial at 415.970.0000.
Source: CoStar Group Real Estate Information www.costar.com