AgdaPkt 2005-10-24 - Laserfiche WebLink

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:::r4 .5 / CB RICHARD ELLIS CONSULTING Sedway Group CBRE CB RICHARD ELLIS when vacancy falls into the low double-digit range. It is unlikely that SFP lease rents will ever reach the unsustainable, inflated peaks seen in 2000. The "flight to quality" that has resulted from the availability of Class A space at discounted lease rates will have the effect of lowering Class A vacancies at a more rapid pace than in the overall office market. Consequently, lease rates for Class A office space in the SFP are forecast to exhibit upward movement as early as 2006. Effective rates, in particular, will rise as free rent and other tenant inducements are curbed. Consistent with expectations for Redwood City to lag the overall market recovery, Class A rents are not forecast to increase in this submarket until 2008-09. Implications for Excite@Home Campus As previously mentioned, prospective tenants for the ExciteCã?Home campus, those in the 75,000+ square-foot size range, are likely to look at a competitive market area that stretches as far as Millbrae, in the SFP's North County, to Mountain View in the northern part of Silicon Valley. High Class A vacancies in some of these submarkets, most notably Foster City and San Mateo, will provide some stiff competition for the ExciteCã?Home space and will dampen the potential for rent growth. It should be noted, however, that the subject property has several advantages over the majority of office properties in Redwood City and the competitive area as a whole, including: . Class A-quality space. The majority of office square footage in Redwood City proper (excluding Pacific Shores and Redwood Shores) and most notably within Mid-Point Technology Park is older space. The subject property, built in 1998, is the newest development in MTP and one of Redwood City's few available, new office campus properties. Excellent freeway exposure. Few other office campuses on the SFP offer this degree of proximity to, and visibility from, u.s. Highway 101. Large tenants in the market for such high profile space would find themselves limited to a half dozen SFP options north of Palo Alto. . Taking these unique features into consideration, CBRE Consulting's outlook for the ExciteCã?Home campus (and comparable properties) is more positive than for the Redwood City office market as a whole. While it is difficult to predict the movement of large office tenants in such a volatile market as the SFP, it is likely that the ExciteCã?Home campus will achieve stabilized occupancy (90 percent) by 2010. Rents for space similar to that in the subject property could begin to rise as early as 2007-08. Based on the market's historical performance and on the expected economic recovery, we expect that once rents begin to move, they will increase at a relatively rapid pace through 2010- 11. Overall, rent growth for Class A campus developments on the SFP is expected to average 2.0 to 2.5 percent per year over the next ten year period. j,\wocd_p,oo...;ng\wo,d_do,,\p,o,.do\2004\ 1004150 Stonfo,d Hoop. R.dwood C"y\Wo,k;ng Dooo\OH;o. Mo,k.t\Offi" Mo,kot F;nd;ng..do<