Starboard TCN Worldwide reported stronger than expected leasing transaction activity for August. With 24 deals closed, the best performance in the month of August for Starboard in over four years. Despite Starboard’s record-breaking month, the overall San Francisco vacancy rate climbed slightly, ending at 19.5 percent. This figure is up from July's 18.45 percent.
The vacancy rate for office space under 3,000 square feet continues to tighten, with an overall 4.5 percent vacancy in the core Financial District. The Civic Center vacancy rate has shrunk to less than 6 percent for office space from 5,000 to 10,000 square feet. The core vacancy problem continues to be in South of Market, Potrero Hill and the southern section of the city, where the vacancy range remains high at 35 to 40 percent with no sign of recovery. Rental rates are beginning to increase in spaces with less than 5,000 square feet in the core Financial District. According to Doron Baruth, Principal and Broker at Starboard, "the days of finding teen deals in spaces under 3,000 square feet are over."
The overall industrial market shows similar signs of tightening with vacancy rates of 8 percent in spaces below 10,000 square feet. However, demand for owner-user investment properties in the industrial and office sectors remains extremely high for properties selling for under $3 million. Inventory is nearly nonexistent in this category. As Stella Wong Florez, Principal and Broker at Starboard, noted "it's like a store having only one bottle of milk with a line out the door of people trying to buy it."
The retail sector for over 5,000 square foot spaces remains extremely soft. Macy's is renting the former FAO Schwartz store on Stockton Street for the holidays, and Apple is beginning construction of their first San Francisco store. Construction of the new Bloomingdale's at Mission and 5th Street begins in October, highlighting the top retail news in August.
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Peter
Rosenthal and Steven Newhauser are agents 
