2010 Global Market Report - NAI Commercial Real Estate

Marin County, CaliforniaMonterey, CaliforniaContactNAI Global+1 609 945 4000Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage Income246,713243,128132,909$121,815Marin County, bordered by the San Francisco Bay, the PacificOcean and the vineyards of Sonoma Valley, is consideredone of the most affluent counties in the nation. Located justnorth of San Francisco’s Golden Gate Bridge, Marin, hometo Mt. Tamalpais, has an excellent climate, lavish open spaceand spectacular views.Marin County office vacancy peaked above 16.8% in 2003,but has since increased to 21.1% by Q3 2009. Vacancyincreased 570 basis points since Q3 2008. The averageasking rate decreased a substantial $2.52/SF in the pastyear to $30.72/SF full service per year. Since 2004, nearly5 million SF of available office space has been absorbedfrom the county’s marketplace.A rare occurrence, the City of San Rafael vacancy, at 27.3%in Q3 2009 compared to 17.7% a year ago, is highercompared to its northern counterpart, Novato. This vacancyincrease is due to the completion of the second phase ofthe San Rafael Corporate Center bringing 160,000 SF ofnew construction to the market.In Southern Marin, the overall average asking rate in Q32009 decreased $0.52/SF to $3.19/SF full servicecompared to a year ago. This part of the county holds thehighest average asking rates that shelters many of thecounty’s successful financial firms.Commercial sale activity experienced a stalemate during2009. The largest transaction in the county closed at thebeginning of the year as Inland Western Larkspur LLC soldits 172,443 SF shopping center to JS Rosenfield & Co.Other sale activity includes MEPT, a pension fund selling 55,75 & 88 Rowland Way in Novato, totaling 168,072 SF, toBarker Pacific Group and Rockwood Capital.Investment activity remained quiet for 2009. We anticipatecontinued softening in values as capitalization rates rise toaccommodate perceived risks. The Marin market is relativelystable due to the high barriers of entry for new development,the active small tenant population and relatively lower useof debt.ContactNAI Global+1 609 945 4000Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage Income402,3984389,312184,867$76,236Monterey County’s major economic generators are agricultureand tourism. The Monterey Peninsula, home to PebbleBeach, Cannery Row and the Monterey Bay Aquarium, isheavily dependent on tourism. The Salinas Valley is one ofthe state’s most significant agricultural regions producing avariety of lettuces, strawberries, grapes and other products.Vacancy numbers rose across the board from Q3 2008 toQ3 2009; Class A office vacancy countywide increased from9.3% in Q3 2008 to approximately 13.1% in Q3 2009,while Class B office vacancy rose from 5.1% to 7.8% duringthe same period. Average rents for Class A office remainedsteady, rising from $27.96/SF to $28.20/SF while Class Boffice saw a decrease from $23.40/SF to $22.80/SF.Industrial vacancy rose from 4.4% in Q3 2008 to 8.2% inQ3 2009 and posted an average rent of $5.64/SF.Water use remains a driving force behind the current stateof future growth as the Monterey Peninsula looks for an alternativewater source other than the Carmel River. Currentlythe PUC is considering three solutions for a desalinationplant in the area: the proposed Cal-Am desalinization plantin Moss Landing, another proposed Cal-Am desalinizationplant in Marina, and the Regional Water Project, also locatedin Marina. In the Salinas Valley, efforts to combat saltwaterintrusion have proceeded well. The Monterey County WaterResources Agency is in the process of completing a projectthat includes modifications to the Nacimiento Dam spillwayand the installation of a rubber dam and diversion facility onthe Salinas River near Marina.Most new development will continue to be focused on theformer Fort Ord and Salinas Valley. Additional developmenton the Monterey Peninsula will be limited by water availabilityand local politics.MedianHousehold Income$90,312MedianHousehold Income$60,077Total PopulationMedian Age45Total PopulationMedian Age32.9Marin County At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$$$$$$$$N/AN/AN/A42.0023.4023.4012.0012.0015.00N/A15.0036.00N/A$$$$$$$$N/AN/AN/A42.0060.0042.0015.6015.6020.10N/A45.0045.00N/AN/AN/AN/A$ 42.00$ 30.96$ 30.24$ 13.80$ 13.80$ 20.10N/A$ 21.29$ 39.09N/AN/AN/AN/A100.0%27.9%16.6%N/AN/AN/AN/A8.1%2.7%N/ADEVELOPMENT LAND Low HighOffice in CBD (per buildable acre)Land in Office Parks (per acre)N/A$ 1,306,800.00N/A$ 1,742,400.00Land in Industrial Parks (per acre)Office/Industrial Land - Non-park (per acre)$$871,200.00871,200.00$ 1,306,800.00$ 1,306,800.00Retail/Commercial Land (per acre)Residential (per acre)$ 1,524,600.00$ 2,395,800.00$ 1,960,200.00$ 2,831,400.00Monterey At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$$$N/AN/AN/AN/A12.006.72N/A3.00N/AN/AN/AN/AN/A$$$N/AN/AN/AN/A46.3227.00N/A17.76N/AN/AN/AN/AN/A$$$N/AN/AN/AN/A28.2022.80N/A5.64N/AN/AN/AN/AN/AN/AN/AN/AN/A13.1%7.8%N/A8.2%N/AN/AN/AN/AN/ADEVELOPMENT LAND Low HighOffice in CBD (per buildable acre)Land in Office Parks (per acre)Land in Industrial Parks (per acre)Office/Industrial Land - Non-park (per acre)Retail/Commercial Land (per acre)Residential (per acre)$ 15.00 $ 40.00$ 261,360.00 $ 609,840.00$ 174,240.00 $ 609,840.00$ 261,360.00 $ 1,524,600.00$ 435,600.00 $ 1,742,400.00N/AN/A2010 Global Market Report ■ www.naiglobal.com 75