MARIN COUNTY ? Unlike the more than 350,000 square feet of new office space done or nearly completed in Sonoma County, Marin County has just two new office projects under construction totaling 150,000 square feet.
Little new construction and a recent pickup in business activity have led to decreasing countywide office vacancy for the past two years, most pronounced in the 2.4 million square feet of space south of San Rafael.
Concessions from property owners in lease deals have evaporated from many southern Marin deals because of the tight market, and those from San Rafael to Novato are seeking up to $30 a square foot. Common office improvements from a building shell or with demolition can cost $50 a square foot.
"The spread between asking and actual rents has narrowed dramatically to 5 cents or less a square foot because the actual rent can end up higher than the asking rate after tenant improvements are amortized," said Whitney Strotz of NAI BT Commercial's San Rafael office.
As a result, tenants are staying put, looking for less expensive locations such as north San Rafael and Novato, looking for space with suitable existing improvements or settling for class B space, Mr. Strotz noted.
An example of that was a recent lease deal he brokered for a 10,000-square-foot John Robert Powers Modeling franchise office in San Rafael. After the choice space had a $25 a square foot difference between the improvements allowance and the cost, and other spaces required $10 to $15 a square foot in demolition work, the franchise owner opted for a space that only needed minor upgrades.
Another option tenants are pursuing in the more-expensive tenant-improvement environment is applying the value of one or two months of free rent a property owner in a softer market might offer toward improvements, according to Steven Leonard of Meridian Commercial.
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