Large Blocks in Demand
The continued success of the San Francisco Peninsula commercial real estate market is sustained by innovative, fast-growing companies. Job growth acceleration and low vacancy rates create high demand for large blocks of space. San Mateo County has outperformed all other Bay Area markets with the latest unemployment rate of 2.3 percent. During this type of economy, rising office asking rates are common. In San Mateo County, these rates not only correlate with demand, but also with these properties having access to prime amenities including retail and public transportation.
While research and development (R&D) average asking rates experienced a small decline, this market sector is well-positioned with 6.8 million square feet of space either under construction or in the development pipeline with much of it already preleased. This trend demonstrates the confidence developers have in this market as well as tenants having a sense of urgency to commit before construction is completed.
Industrial average asking rents have risen the last six quarters to $1.75, an increase from last quarter's $1.54 rate. These asking rates are a direct measure of market demand demonstrating the overall strength of commercial real estate on the San Francisco Peninsula.
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