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Market Report

San Francisco Industrial Market Report

Second Half 2019

Limited Construction Activity Heightens Competition Among Tenants and Investors for Existing Assets

An expanding local economy and limited industrial space keep operations tight with the ability to raise rental revenues with new leases. A booming technology industry has produced robust employment and household income gains in recent years. Job opportunities are abundant, outnumbering the metro’s qualified job seekers, as companies continue to expand. These factors have helped to push the median household income to nearly twice the national level. Though the cost of housing is five times greater than the national rate, demand for rentals within the city remains robust, supporting a growing consumer base who desire last-minute mile deliveries. Biotech firms are also seeking research and development space to be near clients. San Francisco’s industrial market is thus localized, and many industrial/flex tenants are here primarily to be close to their delivery points within the city.  Due to expensive land, few industrial properties have been built in San Francisco over the past decade, keeping vacancy rates tight and allowing marketed rents for available space to rise annually the past four years.

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