The direction of the 27.6-million-square-foot East Bay community-neighborhood shopping center market is uncertain, with occupancy showing small gains but rents showing small losses. In the second quarter 31,000 square feet of net absorption pushed the vacancy rate down 10 basis points to 6.2%, which is down 30 basis points from a year earlier. The 0.1% decrease in the average asking rent, to $27.94 psf, was the ninth worst performance among the top Reis markets, and the average effective rent fell 0.1% as well, to $24.82 psf. In July vacancy was unchanged but rents fell another 0.2% by both measures.
No new community-neighborhood spaces had been added in 2010 or 2011, but a 17,045-square foot expansion of the Union City Landing community center completed construction in August. Reis predicts the vacancy rate will end 2012 at 6.0%, and decline only slowly as new supply starts to come on line. By the end of the forecast period it is expected to be around 5.0%. Asking and effective rent increases of 0.4% and 0.5% for all of 2012 are predicted to be followed by rising gains, peaking at 3.4% and 4.2% in 2015.
The power center vacancy rate was 5.8% in the second quarter, up 80 basis points from the prior quarter and 40 from a year earlier. The average asking rent for power centers was $30.09 psf, down slightly for the quarter but up 0.7% year-over-year. The 318,000-square-foot Grafton Station power center had completed construction in January 2012, and the 321,000-square-foot second phase of the Pacific Commons power center is expected to be fully open in May 2014.
Terranomics reports a vacancy rate of 6.0% for East Bay shopping centers, and an average asking rent of $20.76 psf. “Both the East Bay and San Francisco trade areas recorded negligible occupancy growth in the second quarter,” according to this source.