Office and industrial space trending in opposite directions for one California county

The  commercial office sector is slow in Sonoma County, Calif.

The office sector in one California county went from robust to weak in 18 months.

Joan Woodard, the president and CEO of Simons & Woodard, told the North Bay Business Journal that the office market in California's Sonoma County is lethargic due to a lack of available tenants and a growing number of businesses that are cautious about adding employees or upgrading to a new facility during the nation's current economic struggles.

"We had a burst of energy toward office space leasing a year and a half ago for seven or eight months then kaput, and it has been pretty quiet for the last nine to 10 months," Woodard said. She added that nearly every facility tour a year ago eventually led to a lease being signed. Now, there's not much going on.

According to data from Keegan & Coppin, the net absorption of office space was 520,000 square feet through the first nine months of 2013, led by the the absorption of 230,000 square feet in Rohnert Park, Calif., and 174,000 in Petaluma, Calif.

But that number isn't nearly as high when you account for the defunct State Farm Insurance claims center in Rohnert Park. That space was responsible for 363,500 square feet of absorption in the submarket, which made the annual net absorption for Sonoma County only 76,000 square feet through the first three quarters of the year.

Rising vacancies and pressure from lenders to fill space have only added to the issues in Sonoma County. Lower property values have hurt, too, according to Woodard.

"The office market in 2013 showed early signs of further decline, but all indications point to a slow recovery for the second half of the year with vacancy rates trending down," Shawn Johnson, Keegan & Coppin managing partner, told the Business Journal.

Sonoma County industrial space performing well
While its office market flounders, Sonoma County's industrial sector has turned into a bright spot.

"The industrial market continues a slow path to recovery, with continued slow growth and slight pressure on rents," Johnson added.

The net absorption for industrial space reached 700,000 square feet through the third quarter of this year. Santa Rosa, Calif., absorbed 239,000 square feet of that, according to Keegan & Coppin.

"The market for warehouse space is actually tight now," Larry Wasem, Airport Business Center's managing partner, told the Business Journal. "Unfortunately, not many are able to build. I expect to see prices rise as a result."

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