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In a localized follow up to the previous post, what we are seeing on a national scale is finally settling in here closer to home. Although certain submarkets such as Menlo Park, Redwood Shores and some others remain strong, we are seeing the overall peninsula office sector decline in absorption in the second quarter of this year. The frenzy of office absorption we saw in the latter half of last year has cooled off almost as quickly as it started. The positive for investors and landlords is that the rental rates continue to climb modestly. Here’s the report summary:
The San Francisco Peninsula office market closed the second quarter of 2012 with the first negative net absorption total in a little over a year, finishing at minus 210,030 square feet. following up a full year of strong and consistent market activity, especially shown in mid 2011, net absorption has declined for two consecutive quarters. Average asking rental rates showed a moderate increase, moving up from $2.91 to $3.03 per square foot on a full service basis. Continuing a trend, the southern submarkets remained extremely challenging for tenants looking for space. Demand in Menlo Park seems to have leveled since the closing of 2011, yet that submarket still shows the highest average asking rate at $4.58 per square foot, full service.
Read the entire report: office-market-research-peninsula-2012-2q