San Luis Obispo County Office Market Snapshot
Vacancy in the San Luis Obispo office market is 4.1% and has increased by 1.0% over the past 12 months. Meanwhile, the national average increased by 1.2%. During this period, 36,000 SF has been delivered, and there has been 34,000 SF of negative absorption. Total availability, which includes sublease space, is 4.3% of all inventory.
Space rated 1 & 2 Star is the most dominant subtype, with 4.1 million SF in this category. There is 2.5 million SF of 3 Star space and 71,000 SF of 4 & 5 Star space.
Rents are around $28.00/SF, which is a 1.5% increase from where they were a year ago. In the past three years, rents have increased a cumulative 7.7%. Furthermore, this is a structurally inexpensive market, with average rents below the national average of $35.00/SF.
About 120,000 SF is under construction, representing a 1.8% expansion of inventory. Moreover, the total market is 36,000 SF larger than it was three years ago, with the entirety of that increase coming from what has delivered in the past year.
In the past 12 months, 36 sales have occurred. Sales have averaged $360/SF, and the estimated value for the market as a whole is $256/SF. The most frequent of these transactions have been those of 1 & 2 Star space, with 28 sales of this space type. This tracks with the overall mix in the submarket, as the subtype is the largest in San Luis Obispo.
Over the past three years, there have been 129 sales, which have traded for approximately $147 million. The market cap rate for San Luis Obispo is 8.4%, moderately above its trailing three-year average of 7.7%.
Employment and population trends are uneven. The number of jobs has increased 2.1% in the past year, whereas population growth is flat.