April 18, 2012, Walnut Creek, CA – According to the Walnut Creek office of Colliers International, a leading global real estate services firm, the north I-680 office market solidified in 2011, and their analysis projects growth in 2012.
Total vacancy receded while asking rents remained flat. Quarterly Class A vacancy settled to a three year low as vacancy gradually declined to 15.6 percent.
Tenants continued to shuffle throughout the market looking for the best deals on office space. There were quite a few deals of note for the quarter but the majority of tenants relocated within the market. The core Class A submarkets in Downtown Walnut Creek, Pleasant Hill BART, and Concord saw very modest absorption with Concord registering the only significant figure at 51,250 square feet.
Looking at the labor market for possible demand, statistics for the North I-680 Corridor, compiled by the California Employment Development Department, reported unemployment at 7.2 percent for the month of February, a 0.2 percentage point increase over December. Even with the slight uptick, unemployment has not been this low since early 2009.
Walnut Creek Downtown Class A vacancy dipped 0.3 percentage points to 14.1 percent, continuing a five quarter trend of falling vacancy. This was the first quarter since 2007 to start off the year with positive net absorption. Notable Class A lease transactions included Berding & Weil taking 23,246 square feet at Mt Diablo Plaza, EnerNOC expanding to 11,000 square feet at Pacific Ygnacio Plaza, and Brady Marketing renewing 6,469 square feet at The Plaza at Walnut Creek.
The market is watching several key investment sale opportunities: Treat Towers, Airport Plaza, Centre Point, and a portion of Swift Plaza. Colliers expects these to trade hands next quarter. Sellers are underwriting market rental expectations. According to the Collier’ report, space absorption and rental increases in Walnut Creek, along with scarcity of institutional quality office properties and low financing costs, are all key factors in the projected financial sales models.
The Colliers Walnut Creek office’s first quarter 2012 market report detailing additional market insight and information for office properties is enclosed.
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