North Peninsula Office Market
Across all North Peninsula markets, net absorption for the quarter was recorded at negative 119,000 square feet, up from negative 1.0 million square feet in the previous quarter. Tenant demand increased to 2.63 million square feet this quarter, up from 660,000 square feet in the previous quarter and up from 2.1 million square feet one year ago. The 916,000-square-foot construction pipeline trended downwards in the third quarter of 2023 upon deceleration in new ground breakings. Market-wide vacancy increased to 15.8% this quarter, up from 15.3% in the previous quarter and up from 11.2% one year ago. On the sublease front, vacancy counted for 4.5% of the total inventory and 28.5% of the total vacancy this quarter, compared with 4.7% of the total inventory and 30.5% of the total vacancy in the previous quarter
North Peninsula Industrial Market
Market-wide R&D availability increased to 15.4% this quarter, up from 14.0% in the previous quarter. Market-wide R&D vacancy increased to 10.4%, up from 8.6% in the previous quarter. The cooling in the North Peninsula’s industrial market continued in the third quarter of 2023 as the availability rate rose for a third consecutive quarter, recorded at 4.9%, up from 4.4% in the previous quarter. Market-wide vacancy increased to 3.1%, up from 2.7% in the previous quarter. The region’s R&D pipeline currently stands at 5.8 million SF of under-construction product. Of that notable ground-up construction, 10.0% is already preleased. The industrial construction pipeline remains obsolete.