The creative office building at 3930 Pacheco Blvd in Martinez is for lease. There is ±7,228 Sq. ft. located across 3 buildings available for lease.
The National Association of Realtors has released its March 2021 edition of its Commercial Market Insights. Here is a brief summary of some relevant highlights.
Commercial Transaction Volume
Commercial Sales Transaction Volume in March of 2021 was down 28% from the prior year on transactions in excess of $2.5 million. The only sector that saw an increase in transaction volume year-over-year was hotels. This is likely due to opportunistic investors moving into the space.
National Commercial Real Estate
Commercial Cap Rates
As the commercial market stabilizes, commercial cap rates will continue to decline. Lower cap rates contribute to higher prices. National cap rates for properties above $2.5 million, apartments averaged lowest cap rate at 4.9% with industrial properties averaging 5.9%.
For properties below $2.5 million Class A apartments had the lowest cap rate of 5.7%, Class B Apartments at 6.4%, and industrial averaged 6.8%
Office leasing continues its negative trend of absorption. Since Q2 of 2020 the cumulative total negative net absorption of 138.4 million square feet. This trend is not surprising as many companies are adjusting to Work From Home (WFH) and adapting their office use accordingly.
Industrial absorption rose 82.7 millions square feet in 2021 Q1 and was net positive 309.7 million square feet for the past 4 quarters. This trend is not surprising either as we have seen an increase in online shopping, which is dependent on warehouse and “last mile” storage.
Bay Area Commercial Real Estate
The commercial real estate market in the Bay Area contributes to national trends, but varies from national trends at many times. The old adage in real estate is “Location, location, location.” Trends in the San Francisco Bay Area very from area to area as well.
It is imperative that you work with a real estate professional that knows what is happening in your region and with your property type. For advice on how to navigate your specific commercial real estate question, please call Peter Maclennan at 925.385.8798.
3930 Pacheco Blvd.
3930 Pacheco Office Building
We just listed 3930 Pacheco Blvd for lease. This was a property that we previously had helped the ownership with the acquisition and the leasing.
This beautiful and unique property was previously an elementary school. It was purchased by a printing company and used as their headquarters for a number of years prior to the acquisition by my clients.
Most recently the property had been occupied by an engineering firm and a day school.
Recently, I have been negotiating on behalf of two clients that are in the midst of a lease renewal for commercial space. My clients, the tenants in both cases, had leases that were set to renew at fair market value. This means that the tenants would need to determine the fair market value of their property and successfully negotiate the new rate.
There are at least two problems with this. First, the landlord is likely to have a better handle on what lease rates are in the current market if they have more than one property or more than one tenant. Second, most landlords believe that rent always goes up.
Often times this puts the tenant in a position of weakness when negotiating the lease renewal. Landlords love this!
The Closer – The Tenant’s Agent
In baseball, a closing pitcher is called in at the end of the game to get the final outs and preserve the lead in a game. Hiring an agent to handle the negotiations helps to rebalance the negotiation process and keep the tenant ahead in the negotiations. A tenant’s agent works much like a closing pitcher in baseball, coming in at the right time in the game to make sure that the tenant gets the most fair deal available.
A good commercial agent will know what is going on in the local market and what current market rents are. This negates the landlord’s advantage of having more market knowledge than the tenant.
In situations where rents have actually decreased, a commercial agent can provide additional leverage by showing the tenant alternative space that may be available for a lower lease rate. While the tenant may not want to move, an alternative location may provide significant financial savings that do not justify staying.
The availability of more affordable space can provide a significant bargaining chip with a current landlord to provide a renewal at a significantly lower rent.
What are some questions that you might have regarding hiring an agent to represent you in the negotiation of a lease renewal?