Real Estate Market Review
NORTHERN CALIFORNIA | San Mateo County
2nd Quarter
2014
Peninsula R&D
Market Forecast
Trends
Absorption
Vacancy
Rental Rate
New Construction
Notable Lease Transactions
Nest Labs
3400 Hillview Ave, Palo Alto
207,857 SF relocation
Relypsa
100 Cardinal Way, Redwood City
79,000 SF expansion/relocation
Google
475 Ellis St, Mountain View
67,000 SF expansion
The Peninsula R&D market finished strong in
the second quarter of 2014. The vacancy rate
remains low with the quarter closing at 9.5%,
a decrease of 1.7% compared to the previous
quarter. Direct available space remains remarkably
low at 6.7%, which led to the decrease in vacancy
seen throughout the Peninsula market. South San
Francisco, at 4.2%, and Menlo Park, at 8.2%, saw
the biggest decreases in total vacancy, whereas
Burlingame saw the biggest increase, at 11%.
The level of activity continued to flatten with few significant transactions,
continuing a trend seen throughout the previous year. The Redwood City
submarket ended the quarter with the highest net absorption at 62,176 square
Janssen Labs
329 Oyster Point Blvd, S San Francisco
29,166 SF expansion
feet, followed by South San Francisco with 28,183 square feet of net absorption.
Sequenta Inc.
329 Oyster Point Blvd, S San Francisco
29,000 SF expansion/relocation
The average asking rental rate for the Peninsula R&D market has remained at
Earlens
4055 Campbell Dr, Menlo Park
27,891 SF relocation
Reset Therapeutics
260 Littlefield Ave, S San Francisco
13,500 SF expansion/relocation
Burlingame was the only city to finish with negative net absorption.
the highest levels since 2006, increasing $.07 to $1.64 per square foot/NNN,
with a range of $1.62-$1.64. The second quarter ended with 348,193 square feet
of positive net absorption. The quarter’s most notable lease transactions were
Nest Labs lease at 3400 Hillview Avenue in Palo Alto of 207,857 square feet and
Relypsa’s expansion/relocation at 100 Cardinal Way in Redwood City of 79,000
square feet. The largest sales transaction was Google’s purchase at 700 East
Middlefield Road in Mountain View of 397,510 square feet.
Notable Sales Transactions
Google
700 E Middlefield Rd, Mountain View
397,510 SF
Source: Costar
Peninsula R&D Real Estate Market Review 2nd Quarter 2014 | 1
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Total Net Absorption
SF
400K
Offices
350K
San Francisco
415.229.8888
300K
Redwood Shores
650.769.3600
200K
250K
150K
Silicon Valley
408.970.9400
100K
Seattle
206.296.9600
50K
Bellevue
425.454.7040
-50K
0
-100K
4Q10
South Seattle
206.248.7300
Tacoma
253.722.1400
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
4Q14
2Q14
1Q14
2Q14
Vacant Space: Direct vs. Sublease
Olympia
360.705.2800
SF
Portland
503.221.9900
2M
1.5M
Contact
Reed Payne
Executive Vice President
Brokerage
Northern California
650.769.3600
rpayne@kiddermathews.com
1M
500K
Designated Broker
Reed Payne
LIC #00818935
0
4Q10
1Q11
Direct Availability
2Q11
3Q11
4Q11
1Q12
4Q12
1Q13
2Q13
3Q13
4Q13
Sublease Availability
Submarket Statistics
Submarket
Belmont
Brisbane/Daly City
Number of
Buildings
13
Total
Inventory
376,652
Direct
Availability
99,691
Sublease
Available
0
Total
Available
Direct
Vacancy
Rate
100,036
26.5%
26.5%
Total Vacancy
Rate
2Q Net
Absorption
0
6
246,113
1,680
0
1,700
0.7%
0.7%
1,700
South San Francisco
72
3,498,235
116,590
31,077
327,995
3.3%
4.2%
28,183
Burlingame
26
650,335
60,605
10,834
29,686
9.3%
11.0%
(17,145)
Foster City/Redwood Shores
28
790,254
37,187
3,802
51,652
4.7%
5.2%
3,359
San Bruno/Millbrae
5
137,582
5,135
0
13,040
3.7%
3.7%
3,200
San Mateo
9
217,812
0
0
0
0.0%
0.0%
1,260
San Carlos
41
1,351,238
118,059
14,399
139,858
8.7%
9.8%
8,530
Redwood City
45
1,604,297
115,682
26,000
206,125
7.2%
8.8%
62,176
66
3,260,635
251,276
14,970
266,246
7.7%
8.2%
256,930
311
11,981,042
805,905
101,082
1,136,338
6.7%
9.50%
348,193
Menlo Park
Totals
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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Peninsula R&D Real Estate Market Review 2nd Quarter 2014 | 2