San Mateo-Peninsula industrial real estate market reports

Q2 2021: Due increases in demand and further expansion of e-commerce, industrial leasing activity has seen varying levels of recovery. 

In Q2 of 2021, the Northern California industrial markets are in varying states of recovery. In markets where the industrial sector plays a traditionally larger role in the economy, like the East Bay and Sacramento, market fundamentals have seen a steady rise since the beginning of the Covid-19 Pandemic. In markets where the industrial sector plays a traditionally smaller role in the economy, like the San Francisco Peninsula and Silicon Valley, market fundamentals have begun to rebound since the peak of the Covid-19 Pandemic.


Economic Conditions

Before the pandemic, unemployment was at historical lows.  While the economy has added back nearly 30,000 jobs since last year, up 7.9% unemployment has only recovered to 2013 levels.


Leasing Activity

Leasing activity has paused, decreasing by 24.4 percent compared with long-term historical average. 


Vacancy Rate

The Q2 2021 total vacancy rate has continued a slight uptick, increasing to 4.8% from a 2019 low of 3.9%. Average asking rents have increased 8.4% over that same time period, underscoring how industrial demand has outstripped supply in the Silicon Valley.


Rental Rate

Base rents have softened slightly in the second quarter, but overall have trended upward since 2015, increasing by 49.1% over the last six years.


Capital Markets

Pricing for Bay Area industrial assets has seen a decrease of 11.7% from their Q1 2020 peak to Q2. After a significant dip in pricing in Q2 2020, prices have rebounded nearly 25%.


Development Activity

There are 25 industrial developments in the pipeline in the greater Bay Area totaling 4.8 million square feet.

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