New Construction Motions Occupancy Gains
As deal velocity ramped up in Q3 2020, San Francisco Peninsula’s commercial real estate market saw occupancy gains, resulting in nearly 332,000 square-feet of net absorption. The overall vacancy rate for all tracked property types rose for the fourth consecutive quarter, standing at 6.8 percent at the end of the third quarter.
As construction resumed, preleased buildings coming online elevated third quarter absorption numbers. In all 1.2 million square feet of new commercial real estate was added to the building base, 90.8 of which was preleased and therefore immediately absorbed. However, notwithstanding these large absorption events, deal velocity also accelerated considerably compared to the prior quarter. New activity outpaced vacancy in the office and R&D sectors, with occupancy gains of 168,500 and 238,000 square feet respectively. Meanwhile, the industrial sector saw occupancy losses of about 74,000 square feet. While activity is well below pre-pandemic levels, demand for specialized life science space in still robust in the market.
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