Leasing Report

Chico, CA Vol. 1, Q1 2012

Brandon Harris, Commercial Real Estate Broker

Market Trends: Favorable Fundamentals

VACANCY RATES
Q4 2011 National: Office- 16.1% (0.2) Retail- 13.2% (0.00) Industrial- 13.5% (0.3) Local: Office- Coming Soon Retail- Coming Soon Industrial- Coming Soon

The parachute is open. The next step is to glide

down, softly, to the ground. We have national vacancy rates on the decline in all sectors. Retail, office, and industrial property availability is lessening and its beginning to reflect on asking rents. The commercial real estate industry is looking at favorable fundamentals, including low construction and development activity, which results in faster absorption of vacant space and subsequently higher rents. REITs are exercising their ability to diversify and are capitalizing on the stability of this new market. Included in this stabilization is the nearly 30% increase in foreign investment in 2011 over the previous year and the purging of over-leveraged properties in the distressed asset market. There are still, however, a few speedbumps in this recovery. There is approximately $2 trillion of commercial real estate debt that will be on schedule to mature in the next 5 years, and with underwriting standards remaining stringent, it will remain to be seen whether these improved market conditions can compete with the debt due. Local Conditions The Chico market has shown signs of stabilization in rents and vacancies following retail rents dropping nearly in half and office rents down as much as 30%. As a result of this stabilization, January of this year has seen a nearly doubling in the number of leases executed than in the previous year. Localized markets such as Forest Avenue, Mangrove, and the Airport have seen increased action as Landlords have been increasingly willing to make new market deals. The Bottom Line Deals are being made, businesses are expanding, and there is well priced space availablefor now.

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RENT RATES
Q4 2011 National: Office- $2.12/sf Retail- $1.29/sf Industrial- $.38/sf Local: Office- $1.08/sf (.008) Retail- $1.07/sf (.01) Industrial- $.33/sf (.005)
All figures are approximate. Sources: Loopnet, CoStar, Colliers

Brandon Harris is a Commercial Real Estate Broker with The Group, Real Estate Brokers You can contact him at brandon@chico.com and follow him @ChicoLeasing