North Bay real estate markets show appeal

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Date: May 15, 2017

By: Glen W. Dowling, Managing Director, JLL

First quarter stats show that more office and industrial tenants are looking to the North Bay counties of Marin, Sonoma, Napa and Solano for space options.

Substantial residential construction now underway in the region’s housing markets is one factor supporting this trend. In Sonoma County, more than 900 apartment units are currently under construction with several projects in the planning stages. Low unemployment is another reason. Unemployment in Marin and Sonoma is below both state and national averages. Even the counties’ parks are contributing big bucks to the economy.

Office Market

Office markets in Marin and Sonoma counties remain steady due to strong tenant demand, and a limited supply of product. Although rates are escalating due to the significant investment activity and lack of supply, rents are still considered attractive to some because of the discounts they provide relative to Class A rents in San Francisco. Even in Marin County, which has the highest average asking rates in the North Bay, these discounts can run from 56 percent to 73 percent of San Francisco rents.

Vacancy rates in Sonoma County have fallen below 10 percent from 13.6 percent this time last year and vacancy is just 4.3 percent in the northern part of Napa County. In Marin County, vacancy is just 7.8 percent if you do not include the former Fireman’s Fund headquarters (700,000 sf). The three-building campus is not divisible to tenants seeking less than 50,000 square feet, a category into which most of the North Bay’s users fit, so this can be a very misleading availability as it pertains to true vacancy.

Pictured above: 607,000 square-foot warehouse at North Bay Logistics Center at 5195 Fermi Drive in Fairfield, one of Solano County’s largest. (JLL)

New Construction – Industrial

In contrast, major industrial users – those seeking more than 100,000 square feet – dominate tenant demand in the North Bay’s industrial sector, especially in Napa and Solano counties. Industrial vacancy has fallen to 3.9 percent from 8 percent in 2013 and heavy demand has spurred new construction. Of four spec buildings under construction, two have been preleased and every indication is that demand is not slowing down.

With strong demand, rents have climbed. In tight markets like Napa Valley’s south county submarket, asking rates for spaces under 30,000 sf have reached as high as $10.20 per square foot, triple net and rent concessions and tenant improvement allowances are less prevalent than they were last year.

About me:

I’m a 33-year veteran in the commercial real estate industry and currently manage a nine-person advisory team for JLL, specializing in the San Francisco North Bay–including Marin, Sonoma, Napa and Solano Counties. The Dowling-Bracco Team of JLL has sold well over a billion dollars worth of leased investments and negotiated several million square feet of leases on behalf of its clients.

Contact me directly by phone at +1(415) 299-6868 or via email at

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