Laserfiche WebLink
Home » San Mateo County: Office vacancy rates still nearly 3x higher than pre-COVID  <br />2023AMERICA'SBEST <br />REALESTATEPROFESSIONALS <br />MonicaCorman&MandyMontoya|DRE01111473&DRE01911643 <br />LET'SCONNECT <br />COMPASSELEANOR RAAB <br />Eleanor Raab joined The Almanac in 2024 as the Menlo Park and Atherton <br />reporter. She previously worked in public affairs for a local government agency. <br />Eleanor holds a bachelor’s degree in Government...More by Eleanor Raab <br />Leave a comment <br />SUPPORT LOCAL JOURNALISM <br />Support journalism in your community: We <br />do our best to provide local residents with <br />important and relevant information. However, <br />we need your support to continue our <br />important work. Please join your neighbors and <br />donate today. <br />Make a one-time donation <br />About Us <br />Contact Us <br />Terms of Service <br />Our Audience & Mission <br />Content Removal Policy <br />Photo Usage Policy <br />Employment <br />Newsletters <br />Express <br />Weekend Express <br />Peninsula Foodist <br />The Six Fifty <br />News Alerts <br />Place an Employment Ad <br />Place a Legal Notice <br />Print Edition <br />Special Publications <br />From our partners <br />Membership FAQs <br />Delivery & Subscriptions Services <br />Customer Service <br />Make a one-time donation <br />Become a Member <br />Advertising & Sponsorships <br />Community Leaders <br />Spotlight <br />© Copyright <br />Embarcadero Media Foundation <br />The Peninsula <br />Palo Alto Online <br />Redwood City Pulse <br />Almanac News <br />Mountain View Voice <br />East Bay <br />Livermore Vine <br />Danville & San Ramon <br />Pleasanton Weekly <br />© 2024 The Almanac Privacy Policy <br />BUSINESS <br />San Mateo County: Office vacancy <br />rates still nearly 3x higher than pre- <br />COVID  <br />Office spaces are sitting empty, yet more offices are being constructed <br />by Eleanor Raab July 17, 2024 10:35 am x  <br />The main entrance to the SRI offices in Menlo Park. May 23, 2024. Photo by Anna Hoch-Kenney. <br />A new quarterly report from commercial real estate firm Kidder Matthews shows <br />that San Mateo County has continued to experience a decline in demand for office <br />spaces, resulting in slightly lower commercial rents and higher vacancy rates <br />throughout the county. Despite this clear trend, nearly 1.3 million additional square <br />feet of office spaces are currently under construction in Menlo Park and Redwood <br />City. <br />The report showed that the direct vacancy rates in San Mateo County are sitting at <br />17.1% as of June 2024, according to preliminary data from CoStar, a real estate <br />information company. The county’s vacancy rates are nearly three times higher <br />than they were pre-COVID.  <br />“Going forward, the Peninsula office market is expected to face persistent <br />challenges,” states the report from Kidder Matthews. “Limited demand and <br />increasing vacancy rates are likely to put additional pressure on pricing and <br />property values.” <br />Total availability rates in San Mateo County, which include office spaces that are <br />available or will soon be available for leases and subleases, have increased to 27% <br />as of June 2024. These rates are up from 24% in June 2023, and 11% in 2019.  <br />These trends have led to new office construction slowing, but not completely <br />stopping, according to Kidder Matthews’ report. San Mateo County has seen two <br />new offices open in the first half of this year, which have added approximately <br />220,000 square feet of office space.  <br />The construction of new office spaces seems to be concentrated in just a few cities: <br />San Bruno, Burlingame, Menlo Park and Redwood City. Each has over 200,000 <br />square feet of office buildings currently under construction, while many other cities <br />on the Peninsula such as Daly City, Brisbane, South San Francisco, Foster City, <br />Belmont and San Carlos don’t have any office buildings under construction.  <br />Menlo Park and Redwood City already have the second and third largest shares of <br />office space in the county, with 7 million square feet and 5.5 million square feet <br />respectively.  <br />‘Adding to the already oversupplied market’ <br />The Elco Yards development at 1601 El Camino Real in Redwood City, is a nearly $600 million mixed-use development covering <br />8.3 acres and six blocks on multiple parcels. Photo by Sue Dremann. <br />However, Redwood City and Menlo Park are on track to add hundreds of thousands <br />of square feet of office space over the next few years. Redwood City has the largest <br />amount of office space under construction in San Mateo County, at just over a <br />million square feet. This includes the Elco Yards mixed-use development along El <br />Camino Real, which will add about 530,000 square feet of office space to the city, <br />and the Broadway Plaza mixed-use development, which will add another 420,000 <br />square feet of office space.  <br />There are over 295,000 square feet of office space under construction in Menlo <br />Park. This includes the Middle Plaza development, which will add nearly 143,000 <br />square feet of office buildings to El Camino Real, and the Vasara development, <br />which will add just over 34,000 square feet of office space to the city.  <br />The report states that new office building construction is only “adding to the <br />already oversupplied market.” <br />It is likely that construction is concentrated in these two cities because rent prices <br />for office spaces remain significantly higher than the county average. While the <br />average asking rent per square foot in San Mateo County sits at $5.82, It currently <br />costs an average of $8.55 per square foot to rent office space in Menlo Park, and <br />$6.33 per square foot to rent office space in Redwood City.  <br />Vacancy rates in Menlo Park are lower than the county average, at 14%, and <br />vacancy rates in Redwood City are higher than the county average at 21%. However, <br />total availability rates in both cities are much higher than the county average. In <br />Menlo Park, just over 34% of office spaces are currently available, and in Redwood <br />City 30% of office spaces are currently available. <br />Despite the negative future outlook on the office market, and the large inventory of <br />available office buildings, there are yet more offices on the horizon for both cities.  <br />Menlo Park has already approved projects that will add approximately 800,000 feet <br />of office space to the city, including Meta’s Willow Village campus project, which is <br />slated to add approximately 800,000 square feet of nonresidential space, and the <br />Menlo Flats project, which will add another nearly 15,000 square feet of office <br />space.  <br />Several other developments have been proposed in Menlo Park, including the <br />controversial redevelopment of the former Sunset Magazine headquarters. If <br />approved as proposed, it would add hundreds of thousands of additional square <br />feet of offices to the city.  <br />Redwood City is in a similar position. The city has already approved several new <br />office building campuses, including the Harbor View project, which will add almost <br />765,000 square feet of office space; the 1 Twin Dolphin Drive project, which will add <br />approximately 200,000 square feet of office space and the 1201 Main Street mixed- <br />use development project, which would add another nearly 100,000 square feet of <br />office space. <br />Plans for the Redwood Life development, which would reconfigure an existing office <br />park to add approximately 2.3 million square feet of office and R&D space to the <br />city, are currently under environmental and design review.  <br />Read the full report at tinyurl.com/kidderofficespace2024. <br />Related <br />Escaped burglary <br />suspect found in Menlo <br />Park <br />October 13, 2023 2:45 pm <br />In "Crime" <br />Sheriff’s Office <br />investigating reported <br />robbery in North Fair <br />Oaks early Friday <br />April 12, 2024 10:44 am <br />In "Crime" <br />Crackdown leads to 120 <br />traffic citations in <br />Redwood City, Menlo <br />Park, Atherton <br />August 22, 2023 11:31 am <br />In "Atherton" <br />Comment * <br />Post Comment <br />Become a Member <br /> <br />HAVING TROUBLE LOGGING IN? HERE’S SOME INFO TO HELP. <br />My Account <br />News Opinion Food Arts & Culture Real Estate The 650: Explore the Peninsula Support Our Work Contact Us <br />GET THE LATEST UPDATES FROM US <br />Click on Allow to get notifications <br />Later Allow