The Sonoma County retail shopping centers market ended 2008 with a vacancy rate of 6.8%, a 420 basis-point increase compared to its mark of just 2.6% at the close of 2007. The average asking rental rate for shop space was $27.19 per square foot (NNN) through year-end 2008. The total gross leasable area (GLA) of all retail centers in Sonoma County, excluding malls, is approximately 5.5 million square feet in 43 total retail centers. The bulk of the retail center inventory lies within the community center category, which accounts for about 38% of the total inventory, or 2.1 million square feet of GLA. The next highest contributors are power centers followed by neighborhood centers, with 1.8 million square feet and 1.6 million square feet of GLA, respectively. Total availability amounted to just 376,878 square feet, comprised of anchor and shop spaces.
The Sonoma County retail centers market is divided into three submarkets: South, Central and North Sonoma County. The total GLA square footage in these three areas is 1.3 million square feet (South), 3.4 million square feet (Central), and 799,030 square feet (North). Vacancy rates differed in the three areas that represent Sonoma County. The North recorded the lowest vacancy in the County at 2.7%, followed by Central at 7.2% and South at 8.3%. The average asking rental rates also varied. The North part of the County reported the highest annual average asking rate at $32.65 per square foot (NNN). Next in line was Central Sonoma County at $27.73, followed by the South at $22.58. South Sonoma County ended 2008 with the most economical asking rate, due in part to its diverse mix of available space. Asking rates for the entire county ranged from a low of $15 to as much as $42 per square foot.
Consumer price index
The consumer price index (CPI) is the benchmark for rental rate escalations in leasehold agreements. The CPI for the Bay Area witnessed a steady increase from the close of 2007, and the CPI as of year-end 2008 stood at 225.824, which translates to a YTD-over-year rate of 3.5% while the average change YTD-over-year is 3.6%.
Notable Lease Transactions in 2008
Tenant Location City Rentable SF
Orchard Supply Hardware Rite Aid Shopping Center Santa Rosa 36,000
Save Mart 1000 Petaluma Boulevard Petaluma 26,900
Kaizen Sports 512 Mendocino Avenue Santa Rosa 5,088
