Of the 3 product types tracked by this report (office / industrial / retail) the industrial sector was the big winner in 2018. The industrial vacancy rate remained below that of the office and retail segments at only approximately 2.3%, meaning the Grass Valley / Nevada City region ended the year with less than 50,000 square feet of available industrial space for lease. In comparison, retail vacancy stood at approximately 3.2% equating to roughly 87,000 of available retail space; while office vacancy came in at about 12.8% representing over 300,000 square feet available.
It should be noted, however, that about one-half of the vacant office space in Western Nevada County stems from only one project – the former Grass Valley Group Nevada City campus – which is now somewhat functionally obsolete due to its massive size and limited divisibility. If this particular property is excluded from the analysis, the office vacancy rate falls to only about 6% representing ±150,000 square feet of available office space. A positive sign for the office sector is that while office space remains by far our softest market segment, the office vacancy rate is falling at a faster rate than both retail and industrial.
Asking sale prices for all sectors creeped up over the year between 5-6%, and industrial asking rents increased during 2018 by roughly 17% – a direct result of the very low industrial vacancy rate. As we enter 2019, the big question on everyone’s mind will be, “How long will the economic expansion continue?”