by Dean Hochman
While the entire Peninsula has experienced an increase in demand for commercial real estate over the past few years, Redwood City is outpacing the region by a wide margin. According to data provided by commercial real estate firm, Colliers International, vacancy rates in Redwood City currently sit at just 1.63%, with the average rental rate at $6.42 per square foot. Across the Peninsula, the vacancy rate is 7.34% and the average rental rate is $4.74 per square foot.
Mike Cobb, Executive Managing Director of Colliers, said that vacancy rates across the Peninsula are as low as he has ever seen them, including during the initial dot com boom. With regards to Redwood City's recent boom, Cobb said that city staff "has been very proactive in changing the climate of downtown. They have done a lot of smart things", adding that the arrival of Box Inc has further helped increase the area's appeal to expanding companies. Their vacancy rate of 1.63% is now almost identical to that of Palo Alto (1.64%), a city known for being among the most desirable in the Bay Area's commercial real estate market.
Despite persistently high demand and extremely low vacancy, rumors about venture capitalists tightening up their cash flow has some people worried that an economic pullback might be on the horizon. VC money is crucial to the growth of the startup market, and a significant slowdown on that front could certainly result in some additional office space becoming available. Still, Cobb is skeptical about any impending pullback being enough to significantly hamstring a Bay Area economy that has been historically healthy in recent years. He sees no slowdown in 2016, and we too, remain optimistic.
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