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2020 Q1 San Francisco Peninsula Market Research Report

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Paradigm Shift

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The overall vacancy rate for all tracked property types remained stable across the San Francisco Peninsula markets. At the end of the quarter, overall vacancy stood at 5.3 percent, 10 basis points below last quarter. Sublease vacancy rate remained unchanged ending the quarter at 1.5 percent. Overall vacancy was buoyed by a resilient office sector, which experienced a contraction in vacant space from 7.3 percent to 6.5 percent quarter-over-quarter. The San Mateo County office market remained competitive and once again office average asking rate rose to new heights at $6.00 full service, likely the peak of this incredibly prolonged cycle.

Contrary to the office market, both the R&D and industrial markets saw an increase of vacant space enter the market and a softening in asking rates. The R&D market saw an uptick in vacancy from 3.9 percent to 4.6 percent quarter-over-quarter, the highest vacancy rate since Q2 2014. Meanwhile, average asking rents descended to $4.09 NNN. San Francisco Peninsula is the epicenter of life science companies in the West, and demand from life science and biotech companies will likely hold strong as the race to develop new therapeutics and medical testing solutions intensifies to combat COVID-19. The industrial market saw vacancy increase from 3.9 to 4.4 percent quarter-over-quarter, while asking rents decreased from $1.94 NNN to $1.88 NNN over the same time period. Although net absorption was negative 245,800 square feet, the market had several significant industrial transactions.

 

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2020 Q1 San Francisco Peninsula Market Research Report

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Related Experts

Mike Cobb

Senior Vice President

Silicon Valley

Mike specializes in the sale and leasing of office, industrial and R&D properties on the San Francisco Peninsula. Mike possesses a depth of market knowledge and experience, and his expertise has proven a great benefit to his clients.

A skilled market analyst and forecaster, Mike has been the lead author of Colliers’ San Francisco Peninsula quarterly market report since 2002. He is the owner of Opinion of Value, a leading commercial real estate blog covering the San Francisco Peninsula and Silicon Valley. In addition to successful assignments with institutional and local property owners, Mikes’ clients have included prominent local technology firms, start-ups, and national manufacturing concerns. He has also successfully represented various non-profit organizations on highly challenging facility acquisition and disposition assignments. Mike joined Colliers International in December, 2001 as a veteran of the brokerage industry and with a strong focus on the Peninsula market.  Mike is active in his local community. He has served as a Director on the boards of a number of non profit groups involved in education and the arts, and been appointed to several financial oversight commissions within his local school district. He has also coached youth sports.

 

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Mike Davis

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Mike joined Colliers International to lead the company’s Industrial and R&D Division in the San Francisco Peninsula office. Since joining Colliers he is consistently recognized as a top 10% producer nationwide (Everest Club) and a top producing broker in the area. Prior to joining Colliers, he was Grubb & Ellis’ Top 3 producer in 2011 and in 2008, 2007, 2004, 2003 and 2002, he was the #1 producer for CB Commercial in the region. Mike has trained several commercial real estate advisors and has been an active principal in his own real estate investments. Mike counts among his clients: Avis/Budget, Balco Properties, Black Creek Group, BYD, California Teachers Association, DHL, Fortress Investment Group, GLP, iStar Financial, Link Industrial Properties (Blackstone), LSG Sky Chefs, Oracle, Prologis, ReadySpaces, The San Francisco Examiner, Union Pacific, UPS, and Windy Hill Property Ventures to name a few. 

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Rick Knauf

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Rick has been in the commercial real estate industry for 39 years and has a diverse background including 31 years in commercial brokerage and 8 years in residential development.  He specializes in land sales with a diverse background and real estate experience including sales, leasing, land acquisition & securing entitlements for in-fill developments.  While in the development business, Rick was instrumental in fueling the growth of two prominent development companies and acquired sites valued in excess of $95 million.  

Combining his extensive brokerage and development experience allows Rick to work closely with his clients to identify opportunities while achieving the best price and terms for their real estate.  His understanding of the market, development process and land pro-forma analysis places Rick in the unique position to provide his clients the best alternatives to maximize the value of their real estate.  

He has consistently been a top producer and has received numerous production awards from Colliers International as well as Broker of the Year from the Association of Silicon Valley Brokers.

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