The market is shuttering a bit as a result of the debt ceiling debacle but the optimism of the Northbay is overshadowing all the state and federal bad news.
With nominal vacancy rates of 8%, 15%, 22%, retail-industrial-office, the commercial market is fairly balanced. The office market remains strong in Marin and Sonoma due to the high demand for office space in S.F. spilling over to the Northbay.
Many industrial users have added space in the first half of 2011. Industrial space in larger sizes is hard to find. Going forward we will see shortages in certain size categories of industrial space. With a shortage of land and burdensome development fees, we won’t see too many new flex or industrial developments. This also creates an opportunity for investing as this is the bottom of the market in pricing of industrial product.
Retail space occupancy has enjoyed steady improvement as consumer spending begins to bounce back.
Overall the commercial real estate markets, including office, will see increased demand and reducing inventories in spite of a slowdown and possible double dip national economy. We have a diversified economy in Northern California that is one of the most innovative and resilient in the world and will continue to outpace the nation (even Texas-Rick Perry) while being responsive to the environment and energy efficiency.