South Peninsula Office Market Report
Strong leasing activity in the first three quarters of this year, signals that the market is recovering from previous lows. Along with a positive 150,000 SF of positive net absorption could be forecasting an upward trend in following quarters. The South Peninsula leasing market has exhibited a continuous downward trend in asking rates, encompassing all property classes and transaction modalities. Notably, sublease rental rates have mirrored this broader market trajectory, registering a marginal reduction in sublease rents in Q3. Free rent, TI’s, and mixtures of each are continuing to be important tools to be able to make deals happen given the current market conditions. In addition, as companies continue to look for ways to bring employees back to the office, amenities including flexible workspaces, more conference rooms, and up-to-date infrastructure also play a big role.
Download South Peninsula Office Market Report 3Q24South Peninsula R&D Market Report
Net absorption in the first quarter of 2024 was relatively flat, posting just ±10,077 square feet of quarter of occupancy losses, causing the vacancy rate to rise to 15.7%. Comparatively, this is a relatively quiet quarter following a year when 1.4 million square feet was vacated in the South Peninsula R&D market, causing vacancy to rise from 9.9% to 15.5% in a single year. The construction pipeline totals ±1.1 million square feet following the completion of 3150 Bay Road in Redwood City, a ±31,170 square foot life science conversion. Rents fell 3.2% quarter over quarter from $5.28 to $5.11 after holding at the same level for the previous three quarters. Although R&D space in the region has always commanded high rents owing to the presence of high-quality R&D space and life science users, that number could fall as market fundamentals soften.
Download South Peninsula R&D Market Report 2Q24