AgdaPkt 2005-10-24 - Laserfiche WebLink

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7/1 4/ CB RICHARD ELLIS CONSULTING Sedway Group CBRE CB RICHARD ELLIS Located approximately two miles from downtown Redwood City, MTP is bordered by residential development to the south, older industrial/commercial properties to the north and west, and the U.S. Highway 101 directly to the east. The Excite@Home campus is the newest office property in the park and, along with the adjacent Ampex buildings, it offers the best exposure to the freeway. Amenities in the immediate area are few - the nearest neighborhood retail center and restaurants are located on Broadway Avenue at Woodside Road, a five-minute drive to the north of the subject property. Smaller technology tenants occupy the majority of the park's older, low-rise, Class Band C flex space. A number of properties are completely vacant, including the Excite@Home campus and the Broadvision buildings, located directly across Broadway to the west of the subject property. A considerable amount of space is also available in the Ampex buildings to the north. Weak demand suggests that vacancies in much of this space, particularly in older properties, will linger as tenants have many newer options to choose from in other competitive areas of the Peninsula. OFFICE MARKET GROWTH PROSPECTS San Francisco Peninsula The overall SFP office market is already showing signs of improvement and CBRE Consulting believes this trend will continue through the 2010 forecast horizon, consistent with expectations of positive job growth. Job Growth. Economy.com forecasts minimal, but positive, job growth for San Mateo County in 2004 and 2005. From 2005 to 2010, Economy.com predicts the addition of nearly 20,000 new jobs in the county, equating to average annual employment growth of 1.2 percent. Office employment is expected to expand at a more rapid 2.9 percent per year pace during these five years, translating into the addition of 3,300 office jobs annually. Forecasts from the Association of Bay Area Governments (ABAG) are slightly more positive; from 2005 to 2010 ABAG expects San Mateo's 357,700-job3 employment base to expand at an overall rate of 1.6 percent per year, for a total of 32,480 new jobs. Similar growth (1.5 percent per year) is forecast for the five-year period from 2010 to 2015. Demand for Office Space. Assuming anticipated new office jobs utilize an average of 250 square feet per worker, Economy.com's employment projections suggest demand for 4.1 million square feet of San Mateo County office space from 2005 to 2010. Assuming no new speculative supply is completed before 2009, at which point new supply is added at the historical annual average rate of 375,000 square feet per year4, the SFP vacancy rate will fall to 13.3 percent by 2010. Using ABAG's assumption of similar job growth trends for the 2010 to 2015 period, CBRE Consulting would expect an additional 4.1 million square feet of office absorption for the next five-year period. From 1996 to 2003, net absorption of office space was highly correlated (0.8) with the change in office employment. Using regression analysis, CBRE Consulting estimated a year-by-year forecast for the SFP office market through 2010. A downward adjustment in the results is necessary to compensate for the fact that our historical data set includes the extreme run-up in office demand in 1999 and 2000. The results of this analysis are presented in Figure 1 and are similar to our space 3 As of September 2004 4 Based on Torto Wheaton data, 1988-1998 (1999-2003 not considered representative of typical market conditions)