Category: san francisco industrial real estate listings (7)

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.

San Francisco Industrial Real Estate

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.

Charles Schwab, Square latest companies to unload S.F. office space
Source: San Francisco Business Times
Reporter: Cory Weinberg
Date Posted: May 26, 2016

The amount of office space available for sublease in San Francisco is about to reach a five-year high now that mobile payments company Square and Charles Schwab are expected to lighten their footprints.

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A Charles Schwab (NYSE: SCHW) spokesman told the Business Times that it is looking to sublease its 327,000 square feet at 215 Fremont St. so it can eventually consolidate into one building at 211 Main St.

Square just put 50,000 square feet on the market from its 1455 Market St. space, Bloomberg reported. That would reduce Square’s leased space there by one-fifth and comes soon after neighboring tenant Rocket Fuel Inc. also put a big block of space on the market after revenue and hiring slowed.

As more companies ditch their office spaces, it raises alarms for a potential commercial real estate downturn, as I detailed last month. Those alarms may blare more loudly now that these potential listings put sublease space at about 1.7 million square feet, San Francisco’s highest total since the tail end of the recession in the last quarter of 2009.

With both real estate developers and tech companies relying on cheap capital, rising interest rates could dent those markets, Glenn Kelman, CEO of brokerage Redfin Corp. said on Bloomberg Television last week.

“There’s a bubble,” Kelman said. “There are prices that are too high on companies. There are prices that are too high on real estate. As interest rates go up, you’re going to see a contraction.”

But these two cases also highlight a paradox on the city’s real estate market – traditional companies that are fleeing the city to lower costs and technology companies looking to lap up as much space as they can afford in a tight real estate market.

Square is one of several tech companies (like Trulia, Zillow and Salesforce) that have looked to gobble up space way ahead of what they actually need in order to anticipate future growth in a space-constrained market. That’s also why the office vacancy rate is at a 15-year low, according to Cushman & Wakefield.

It’s also why 80 percent of the 4.1 million square feet of office space under construction in the Bay Area is pre-leased, as DTZ research director Garrick Brown detailed in a March blog post. He said there’s little reason to worry, even if the economy takes a dive in a couple years.

“So if current leasing trends persist, it is highly likely that none of this space will be delivered without a tenant connected to it. None! So is there about to be an oversupply of office space in San Francisco? It sure doesn’t look that way to me,” Brown wrote.

This is Charles Schwab’s second round of San Francisco consolidation in recent years, after it subleased its old headquarters at One Montgomery in 2009 to cut expenses. Last year, it announced intentions to move hundreds of jobs out of San Francisco to lower-cost places like Colorado and Texas.

“As the number of San Francisco employees has gradually declined, it has made it possible this year to consolidate some of our office space in the 215 Fremont building. Hence there is space available there for leasing,” Charles Schwab spokesman Greg Gable told the Business Times last week.

Real estate brokers said they haven’t seen the South Financial District space officially hit the market yet, so it’s unclear how it will be priced. Charles Schwab signed a deal there in 2001, renting at an ultra-low rate of $21 a square foot through 2024, according to CoStar.

Link to article: Office Bubble

With Little Available Modern Space, Investors Scrambling for Bulk Warehouses in Second-Tier Markets, Ramping Up New Development

Source: CoStar
Reporter: Randyl Drummer
Date: February 5, 2015
Article Link: Warehouse Owners

Package shipper UPS isn’t the only one who loves logistics.

Property owners and investors are singing the praises of the unattractive but highly functional and in-demand property type after another quarter of strong rent growth and increasing demand for modern, bulk warehouse space in key distribution markets.

So much so in fact, that investor demand for warehouse and logistics properties is limited only by the current shortage of modern new buildings available to buy, according to CoStar analysts presenting their findings at the Fourth Quarter Industrial Real Estate Review and Outlook last week.

With rental rates on the rise, especially for new, high quality logistics space, “You can build and lease a building potentially for the next 10 years with a good credit tenant,” said Rene Circ, director of research, industrial for CoStar Portfolio Strategy. “This is as good a time in industrial real estate as you could possibly imagine, and we are seeing that in terms of questions from our clients and people wanting to get into the market.”

Co-presenter and senior real estate economist Shaw Lupton also noted that, despite the dearth of property available in the market, sales of institutional grade properties have never been stronger in terms of sales volume and square footage traded.

Capitalization rates are at a record low of below 6% for institutional properties, with reports of much lower cap rates for sales of big box warehouse leased to triple-net credit tenants in the best markets, Lupton said.

“It’s a great time to own industrial real estate, and it’s increasingly competitive to get into it,” Lupton said. Investment sales were up a solid 8% in the industrial sector in 2014 to $60 billion.

Despite the robust investor interest, industrial property sales still lagged multifamily, office and retail property sales, largely because there simply wasn’t enough buildings available to buy. Construction on new bulk warehouse space is ramping up, but it has yet to catch up with investor demand for the new modern facilities favored in tenants for their increasingly sophisticated and high-tech logistics supply chains.

CoStar analyzed the inventory of newer logistics buildings five years old or less compared with all existing logistics buildings and found that both the supply of newer buildings and the ratio of sales has dwindled significantly since 2002, when 32% of all trades were of buildings less than five years old. Today, the number is closer to 10%.

“New supply will be needed to raise the overall level of transaction value,” Circ said. “You can make the argument that lack of new construction is holding back sales by as much as 10 percentage points. Building (prices) are being bid up because there are just not enough sellers.”

While industrial real estate rarely outperforms other more glamorous property sectors, rents for industrial space, led by demand for newer, high-functioning properties, grew an average 4.5% for all industrial properties in 2014 over the previous year. That rate of increase outstripped the healthy 3.7% rental rate increase logged by the office market, 3.2% in the apartment sector, and the 3% rent growth in retail real estate.

The amount of available space on the market is tightening. The 8.7% vacancy rate for logistics space in the fourth quarter compares with a reading of 9.9% at the height of the last real estate cycle in 2007. Absorption totaled 167 million square feet in 2014, slightly lighter than the year before only because of the lack of usable vacant space, Lupton said.

“There just isn’t enough space out there to allow for [larger] numbers,” he said. “We’re not lagging much below the absorption peak, but to get beyond that, we absolutely need more new construction.”

While logistics construction was up 14% in 2014 to 136 million square feet, it’s still about 44 million square feet below the early 2000s peak of 180 million square feet.

While the recovery in rents and property values for high quality logistics space is nearly complete, Circ and Lupton noted that the light industrial property segment is still in the early expansion phase, with very little new construction, which is expected to change over the next few quarters.

“There’s still a lot of runway for growth in light industrial,” Circ said, adding that the improvement in this sector of the industrial real estate market is a very promising sign for the recovery of numerous local markets.

“These are not the big multinational companies, the Amazons, these are local businesses. We’re seeing the light industrial segment doing really well, which gives me a lot of comfort in the strength of local economies,” Circ said.

“When you see these local manufacturing and housing-oriented businesses taking space and making lease commitments, it means they have a lot more visibility into their business growing again, and that supports the guts of the local economy.”

2170 Cesar Chavez_Web

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After representing the Buyer in the sale of the 321-323 Allerton Avenue property in South San Francisco in April, Calco Commercial Real Estate is now marketing the property for Lease. The 10,000+/- commercial office building can be divided to two (2) units, boasts a new roof & HVAC. The property includes on-site private parking for 42 cars. The Owner can provide build-to-suit interior.

For more information on this listing or Calco’s other available properties, call 415.970.0000.

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Calco Commercial brokered both sides of the sale transaction for the 98,000+/- square foot multi-unit industrial complex located at 2200 Jerrold Avenue in San Francisco.   This 25 unit complex consists of clearspan warehouses with drive-in roll-up doors, and private on-site parking.  

Calco Commercial, Inc. is a solution based San Francisco and Peninsula area commercial real estate brokerage firm.   Specializing in the sales and leasing of industrial, office and flex use properties, Calco Commercial offers definitive results with personalized service.  Steeped in knowledge about the Bay Area marketplace, Calco brings our clients over two decades of real estate experience coupled with unmatched customer service and prevailing technology.  Utilizing these resources, Calco provides the tools to help our clients make the right decisions in the ever-changing real estate marketplace.

To view our current listings, click here: Calco Listings

Have any questions about the San Francisco commercial/industrial real estate market place?  Give us a call at 415.970.0000.  2200 Jerrold 2

Marking our 55th deal in 2013, Calco Commercial Real Estate has leased 19,230+/- square feet located at 301 Toland Street in San Francisco.  This space consists of high-cube warehouse area with two (2) drive-in loading doors, one (1) dock and abundant street parking.

To view Calco’s current listings, click here: Calco Listings

San Francisco Commercial Real Estate

The 2200 Jerrold Avenue complex in San Francisco has one unit now available for lease with the following property features:

  • Concrete, tilt-up construction
  • Clearspan, 22′ ceiling height, sprinklered & drive-in loading door
  • Private & secure on-site parking
  • $1.10 psf. NNN

Click here to view the full brochure: 2200 Jerrold

To view Calco Commercial’s other available real estate listings, click here:  San Francisco Commercial Real EstateCalco Listings