The north Sonoma County Highway 101 corridor industrial and office real estate markets continue to improve.
Industrial vacancy saw continued improvement, which has spurred on recent construction projects in the area. Industrial vacancy rates decreased 5.0 percent in the fourth quarter of 2014 from 5.5 percent in the fourth quarter of 2013.
The office market continued its slow improvement over 2014, with 22,900 square feet of net absorption. Office vacancy rates decreased to 15.7 percent in the fourth quarter of 2014 from 16.4 percent in the fourth quarter of 2013.
Industrial monthly lease rates are 75¢-$1 per square foot on a triple-net basis for higher-quality warehouse manufacturing space and as low as 60¢-70¢ gross for older or larger warehouse spaces, of which there are very few available in the market.
Office rates were stagnant in the past year. Full-service monthly rents for class A space were $1.70-$1.95 per square foot. Class B rates were $1.35-$1.50, full service.
Caltrans completed construction of the Highway 101 interchange at Airport Boulevard, and Charles M. Schulz-Sonoma County Airport completed the runway expansion project. The latter positions the local airport to pursue additional air carriers to serve the Sonoma County market.
Sonic completed installation of a fiber-optic network in the airport business park area. The company bundles gigabit broadband with business hosted PBX phone service. Gigabit access is one of the fastest Internet connections available, and the cloud-based PBX solution will provide next-generation telephone service to businesses at in the airport area.
The planned headquarters expansion for American AgCredit at the corner of Aviation and Airport boulevards is on schedule for completion late this year. The two-story, 120,000-square-feet office project will be a landmark Sonoma County project.
Westwind Business Park began construction on two build-to-suit projects. M.A. Silva USA is completing a 67,000-square-foot industrial building expansion, and Cousteaux French Bakery started construction on a 30,000-square-foot commercial production facility.
Industrial activity has picked up with the wine industry, but supply is short for smaller wine-storage facilities.
In 2014 Keegan & Coppin was involved in 41 office leases, ranging from 120 square feet up to 54,772 square feet totaling 165,401 square feet for both renewals and new leases. The industrial market has seen at least 26 leases, ranging from 500 square feet to 45,200 square feet, totaling 172,405 square feet of industrial space leased or renewed.
With the economy showing signs that the recovery is in full swing, the forecast for 2015 is more upbeat. With interest rates remaining at all-time lows, companies are taking advantage and purchasing available properties that have come on the market. Foley Family Wines, one of the most recognized wineries in Sonoma County, acquired American AgCredit’s headquarters at 200 Concourse Blvd. The three connected office buildings total 32,943 square feet on a 2.75-acre site and plans to occupy the building as soon as it becomes available.
Unemployment has not been this low in the county since December 2007. Unemployment at the end of the 2014 was 4.7 percent in Sonoma County, which was lower than the state average of 7 percent in December 2013. Office user expansion is just now starting to affect the marketplace that will continue to help bolster the regional and local economy.