North Peninsula Office Market
Market-wide vacancy increased slightly to 19.0% this quarter, up from 18.2% in the previous quarter and 15.3% one year ago. Sublease vacancy remained unchanged this quarter at 6.1%. Market-wide availability was recorded at 21.0% this quarter, up slightly from 20.5% from the previous quarter and 18.7% one year ago. Sublease availability was recorded at 6.6%, up slightly from 6.5% in the previous quarter. Leasing activity in markets where active demand continues to remain stable will continue to experience elevated concession levels from landlords; however, asking rates should remain firm. Going forward, companies are expected to continue leasing space, but at a more meticulous and strategic rate. In many cases, companies are looking to relocate to higher quality yet smaller footprints because asking rates have come down. Asking rates in low occupancy distressed assets have more room to fall in the near term.
North Peninsula Industrial Market
Market-wide R&D availability increased to 26.4% this quarter, up from 21.2% in the previous quarter. Market-wide R&D vacancy increased to 21.0%, up from 15.8% in the previous quarter. The North Peninsula’s industrial market availability rate increased in the second quarter of 2024 to 7.4%, up from 5.9% in the previous quarter. Market-wide vacancy increased to 5.2%, up from 3.8% in the previous quarter. The region’s R&D pipeline currently stands at 4.6 million SF of under-construction product. Of that notable ground-up construction, 10.4% is already preleased. The industrial construction pipeline remains obsolete.