Monthly Archives: April 2013

Silicon Valley First Quarter 2013 Office & Industrial Market Updates

The Silicon Valley commercial real estate market consists of the following cities: Campbell, Los Gatos, Cupertino, Saratoga, Fremont, Milpitas, Gilroy, Morgan Hill, Los Altos, Mountain View, Palo Alto, San Jose, Santa Clara and Sunnyvale. Colliers International just released first quarter 2013 statistics.

 

Silicon Valley is slowly but cautiously returning to business as usual with retail sales on the rise, unemployment rates falling into the single digits and housing prices up 26.1%.

Silicon Valley Commercial Real Estate Office Update

Silicon Valley office market was somewhat sporadic but recorded 1.37 million square feet gross absorption (represents 23.3% drop from previous quarter) first quarter 2013. Average starting rents for office rates jumped 12.2% to $3.12 per square foot.
Silicon Valley Commercial Real Estate R&D Update
Silicon Valley R&D activity picked up and recorded 2.13 million square feet of gross absorption in 1Q13, a 15.4% increase over the previous quarter. Average starting rate of R&D leases was $1.31 per square foot NNN. The industrial sector posted the largest gain, averaging $0.72 per square foot NNN in 1Q13, representing a 20% increase over the previous quarter.

 

Will Housing Go Up? Prices Are Trending Upwards

John Burns Real Estate Consulting provides a summary covering the state of the housing market on Fox Business.

  • Investors: They won’t sell while home prices are going up.
  • Entry-level buyers: 30% of buyers are entry-level which is a typical number, but you would think the percentage would be higher given the recovery and the number of homeowners with no equity.
  • Gen-Y Homeownership: We ballpark that they will achieve 5% lower due to high-debt.  More research is needed here.
  • Normal Seasonal pickup: Let’s not make a headline out of seasonally adjusted annual existing home sales being down 0.6% month over month.
  • California Inventory: Two (2) of our team members have received unsolicited offers on the California homes they live in
  • California Growth: California’s housing market is hot, despite increasing reports from our clients in Texas and Nevada that they are seeing a surge of affluent Californians moving in to avoid the new 13.3% top tax rate.
  • Southeast Lag: The Southeast is late to the recovery partially because investors believe that price appreciation will be less likely (note-our Consulting SVP in Atlanta, David Kalosis, reports that the markets in Atlanta and the Carolinas have improved dramatically this Spring).
  • Fed Stimulus: How long will the Fed keep buying $45 billion per month in mortgage securities to keep rates down?
  • Get in Now: At the risk of sounding like a broken record, monthly housing payments are near all-time lows and are trending up.
  • Pent-up Demand: Consumers can now look in the rear view mirror and see that they should have bought 6 months ago. This should increase demand.

 

San Francisco Peninsula First Quarter 2013 Office & Industrial Market Updates

The San Francisco Peninsula commercial real estate market consists of the following cities: Brisbane, Daly City, South San Francisco, San Bruno/Millbrae, Burlingame, San Mateo, Foster City, Belmont/San Carlos, Redwood Shores, Redwood City and Menlo Park. Colliers International just released first quarter 2013 statistics.
San Francisco Peninsula Commercial Real Estate Office Update
The San Francisco Peninsula office market rents have shown modest but steady increase despite rising vacancy rates. Overall, the Peninsula and Silicon Valley benfitted from strong commercial real estate recovery. There is a limited supply of high end office space. First quarter 2013 gross absorption was 856,956 sq ft.
San Francisco Peninsula Commercial Real Estate R&D/Industrial Updates
The San Francisco Peninsula R&D/Industrial market saw strong gains in 1Q13, compared to 4Q122. R&D rates have jumped from $1.83 NNN to $1.94 NNN, and industrial rates have inched up from $0.79 NNN to $0.81 NNN.