Welcome to the NAI Northern California’s “Market Pulse” feature. We checked the pulse of the South Bay commercial real estate market to discover the ups and downs of the office, industrial, retail, and multifamily markets. Each market has four dimensions: current inventory, under construction, 12-month net absorption, and vacancy rate.
Check out our October 2019 South Bay Market Pulse infographic. If a dimension is on the rise, the pulse goes above the baseline; if it’s on the decline or negative, the pulse will dip below the baseline.
This month, the South Bay office market’s inventory is holding steady at 130 million sq. ft. but is expected to rise. Approximately 5.5 million sq. ft. are under construction, slightly down from September, but this figure is trending upward. The 12-month net absorption rate is up to 3.3 million sq. ft. of office space, an increase over last month. The vacancy rate is at 8.1 percent and is continuing to drop.
For the industrial market, 197 million sq. ft. of space is in the inventory, the same as last month, but this figure is expected to increase. The space under construction is also projected to rise, at 771,000 sq. ft. (the same as September and August). The 12-month net absorption is down from last month, at 884,000 sq. ft., but on an upward projection. The vacancy rate is slightly higher than September’s, at 5.8%, and is expected to go back on the decline.
There are 79.7 million sq. ft. of retail space available, a slowly decreasing trend. The space under construction has been the same for the last two months, at 1 million sq. ft., but is expected to decline. The 12-month net absorption rate is continuing to drop, currently -12,000 square feet. Vacancy rates are holding steady at 3.4%, but a drop is projected for November.
The multifamily market is holding strong at 145,000 units available in the inventory, slightly more than last month. Construction is at 9,000 units but is expected to increase. The 12-month net absorption rate is 2,800 units and has been rising steadily over the last few months. The vacancy rate is at 4.8%, up almost half a percent from last month, but is projected to decline.
The South Bay market stretches from Palo Alto down through Mountain View, San Jose, Morgan Hill, Gilroy, Hollister, and southeast through the mountains. For more detailed updates or to find out how the South Bay’s submarkets are doing, contact one of our advisors. Whether you’re interested in office, industrial, retail, or multifamily properties, we can help.
Data source: CoStar Analytics