North Marin County office market emerges from pandemic pause
The Marin County office market ended the fourth quarter of 2021 with positive net absorption, the first quarter of net absorption since the start of the pandemic.
Although a modest gain of 67,000 square feet, this absorption signals the start of a turn towards recovery for the office market in the county. Most of the last quarter’s absorption came from transactions between 2,000 and 3,5000 square feet. Class A rental rates at marquee properties across the county have also increased. Another positive sign for the health of the market and the recent demand for office, industrial and apartment building space.
The most notable transaction of the past 12 months was the sale of a portfolio of 60 properties of office, industrial and apartment buildings for a total of $436.5 million to Hamilton Zanze & Company and Graham Street Realty . The new ownership group is implementing modernization plans for several Class A and B office buildings in the portfolio.
Meanwhile, landlords across the county have continued to upgrade buildings throughout the pandemic to meet the demands of returning to the office.
Several of our large life sciences companies, including BioMarin and Ultragenyx, have continued to consume space in the market, acquiring properties over the past 12 months.
In general, owner-user buying activity has increased over the past 12 months across the county. Marin Transit, Sol Food, Higher Ground Education, St. Vincent DePaul and Chrisad have all purchased buildings in the past year.
Touring and rental activities increased in the first quarter of this year. There are several pending leases in the 20,000 to 50,000 square foot range that will result in positive absorption in the second quarter.
While short-term leases have been used as a concession for the past 24 months, longer terms are returning. Some of these larger office transactions are structured with 10-year terms.
Owner-user agreements and the signing of longer-term leases by tenants are good indicators of the improvement in the office market in Marin. And activity this quarter suggests deal sizes are increasing.
Haden Ongaro (415-526-7676) is Executive Managing Director and North Bay Market Leader for Newmark.