Since the beginning of 2014 until now, the Western Nevada County commercial real estate market, as a whole, has been slowly but steadily tightening and improving. Here’s a summary of 2015 mid-year commercial property review and a breakdown of each property sector:
A notable anomaly to the positive overall trend mentioned above involved Grass Valley USA/Belden vacating 150,000 square feet in Nevada City and consolidating into approximately 50,000 square feet in Grass Valley. This event alone accounts for a roughly 3% increase in the office vacancy rate as shown in the chart below, and it obscures the improving situation most everywhere else in the office market. Class A (i.e. the newest and best space) office vacancy is higher than overall office vacancy, but there is a real shortage of large contiguous Class A space with only one building containing over 10,000 square feet of available space.
|Overall Office Vacancy|
|Median “Asking” Office Lease Rates – Gross per SF/Mo|
|Median “Closed” Office Sale Prices per SF|
The industrial market remains very tight with current vacancy below 4%. This trend is starting to lead to industrial land sales, which had been non-existent the previous 7 years. As with Class A office space, a larger industrial user looking for new space will have few options besides building anew from scratch.
|Overall Industrial Vacancy|
|Median “Asking” Industrial Lease Rates – Gross per SF/Mo|
|Median “Closed” Industrial Sale Prices per SF|
Insufficient data to render meaningful number.
The retail market remains the most stable of all commercial product types, with Class A retail locations/buildings in huge demand. Nevada County is finally on the radar of national retailers, but prime retail spots are very hard to come by due to topography and zoning limitations. On the other hand, online shopping continues to grow, increasing competition for “brick and mortar” retailers. Class B & C retail locations will need to offer competitive rental rates in order to maintain tenants.
|Overall Retail Vacancy|
|Median “Asking” Retail Lease Rates – Gross per SF/Mo|
|Median “Closed” Retail Sale Prices per SF|
$160 (5 sales)
In summary, the Nevada County commercial real estate market has been slowly improving, but has yet to benefit from any meaningful spillover from the huge recovery occurring in the Bay Area. However, with commercial and residential real estate prices in the Bay Area now at all-time highs,we expect more reasonably priced tertiary areas like Nevada County to start benefiting from the fallout. With commercial banks flush with capital to lend and inflation appearing to be under control (at least in the short term) 2015 should end up being the most active real estate market in Nevada County since 2007.
For more information, please contact Lock at 530-470-1740 or visit highlandcre.com. Lock specializes in the leasing and sale of commercial/investment properties and has over 25 years of experience in the field, including over 15 years in the Grass Valley/Nevada City area.