SAN FRANCISCO INDUSTRIAL Q1 2017 MARKET SUMMARY: LEASE RATES UP 5.5%; WAREHOUSE VACANCY 2.9% The San Francisco overall industrial market ended Q1 2017 with vacancies at 3.4% (548,790 sf negative absorption), which represents a small uptick from year end 2016 rates of 2.8%. While overall vacancy rates have increased slightly, warehouse space in San Francisco remains scarce with only a 2.9% vacancy rate. Further, according to industry data, the national industrial market has experienced 28 quarters of net occupancy gains with 1.3 billion in square feet absorbed since 2011 (Bisnow). Due to the continued lack of industrial product in San Francisco, rents continue to rise, and Q1 2017 witnessed a 5.5% increase in rents over Q4 2016 from $1.75 to $1.84, respectively. San Francisco Market Indicators 12-Mo Q4 16 Q1 17 Forecast Overall Vacancy 2.8% 3.4% Net Absorption SF -52K -548K Quoted Rents $1.75 $1.84 (Source: CoStar Q1 2017 Market Report) Sublease vacancies also increased modestly in Q1 2017 to 279,036 square feet from 217,464 square feet reported in Q4 2016. Conversely, industrial sales in dollar volume increased at the close of 2016 over the previous quarter with a total volume of $51,116,000, and averaging $290.61 per square foot, compared to $39,600,000 in revenue, and $260.71 average per square foot in Q3 2016. Yearover-year sales are were lower in 2016 than in 2015, but investors are seeing higher CAP rates averaging 6.47% in 2016 compared to the 2015 year-end average of 5.44%. While the San Francisco industrial leasing activity, as reported by CoStar, for Q1 2017 decreased slightly, Calco Commercial, and other firms are reporting steady leasing activity with positive absorption rates. Calco Commercial leased several notable industrial properties in Q1 2017 including: 1980 Oakdale Avenue (36,400+/- sf), 3785 Bayshore Boulevard (35,658+/- sf) and 225 Barneveld (15,576+/- sf). Calco Commercial alone leased 160,424+/- square feet in Q1 compared to 115,783+/- square feet in Q4 2016. 2017 does expect to see some new industrial construction in San Francisco, but many of the larger projects (i.e. Hooper North & South) are nearly all pre-leased. Due to the continued lack of quality product, coupled with the redevelopment of industrial properties (i.e. residential and office conversions), demand for industrial space persists. For these reasons, now is the time to consider leasing, subleasing, selling or repositioning your asset. Calco Commercial is a leading industrial & commercial real estate firm. We have completed more transactions in the industrial market than any other firm in San Francisco. We have decades of experience in Landlord /Owner representation, and repositioning assets into net leased properties with in-place income streams. Calco Commercial is a full service firm that can help make the most of your real estate properties and investments. If you would like to discuss your real estate options, or would simply like more information related to current market conditions, please call our office a 415.970.0000, or directly contact one of our professionals. Economic Indicators 12/16 3/17 SF Unemployment 3.4% 3.5% CA Unemployment 5.2% 4.9% U.S. Unemployment 4.7% 4.5%* (Source: Bureau of Labor Statistics) * February 2017 data San Francisco Sales Quick Stats 12-Mo Forecast Q3 16 Q4 16 Total Volume 39M 51M Total Transactions 5 5 Average PSF $260 $290 (Source: CoStar Q3 Market Report 2016) 12-Mo Forecast Scott Mason, President San Francisco Market Specialist 415.215.1937 (cell) / scott@calcosf.com BRE #01036610 Blake Miller, Associate Peninsula Market Specialist 415.364.8113 / blake@calcosf.com BRE #01939985 The information contained herein was obtained from multiple sources we deem reliable. However, we make no representations or warranties to the accuracy of the information.
1600 & 1616 Donner Avenue, SF 225 Barneveld Avenue, SF Leased - 37,596+/- SF Leased - 15,576+/- SF 1599 Custer Avenue, SF 405 Victory Avenue, SSF Leased -7,200+/- SF Leased - 13,650+/- SF 3785 Bayshore Boulevard, SF 1980 Oakdale Avenue, SF Leased - 35,658+/- SF Leased - 36,400+/- SF
404 Talbert Street, Daly City 81 Dorman Avenue, SF Leased - 12,800+/- SF Leased - 10,400+/- SF 210-212 Littlefield Avenue,SSF 650 Potrero Avenue, SF Leased - 34,100+/- SF Leased - 21,650+/- SF 625-635 Potrero Avenue, SF 40 Loomis Street, SF Sold - 6,735+/- SF Sold - 4,800+/- SF
375 Alabama Street, SF 2280 Shafter Avenue, SF Leased - 15,295+/- SF Leased -6,000 +/- SF 201 Toland Street, SF 200 1350 Industrial 17th Street, Street, SF SF Leased - 32,580+/- SF Yard Leased - 18,880+/- - 7,660+/- SF 777 Mariposa Street, SF 434 Victory Avenue, SSF Sold - 36,600+/- SF Sold - 11,200+/- SF
OFFICE/TECH TRANSACTIONS 375 Alabama Street, SF Valhalla Industrial Complex, SF Various Office Units Leased - 8,055+/-SF Leased - 2,870+/- SF 221 Main Street, SF 1875 S. Grant Street, San Mateo Leased - 4,949+/- SF Leased - 1,759+/- SF