The office market in southern and central Marin County remains steady, with rising rental rates, limited tenant activity, and a focus on smaller office spaces as larger employers evaluate remote work, writes C. Whitney Strotz of Cushman & Wakefield.
The office market in southern and central Marin County has remained steady since the onset of the pandemic, consistently outperforming the broader region of Sonoma and Marin counties.
At the close of 2024, the submarket reported an 11.3% vacancy rate, lower than the Sonoma—Marin overall 13.3% vacancy. This stability stands in sharp contrast to other regional markets, with downtown San Francisco ending 2024 at a staggering 34.2% vacancy and northern Marin at 16.2%.
Average asking rental rates continue to trend upward, reaching $4.09 per rentable square foot per month on a full-service basis at the end of 2024. High-quality class A spaces command even higher rents, with premium properties securing rates in the $6.75 to $7.00 range.
However, while demand for quality office space remains strong, the high cost of tenant improvements presents a challenge, making it difficult to upgrade spaces while maintaining competitive pricing. Current regulations, such as Title 24 and other energy conservation and building code updates, have significantly increased the costs of modernizing office spaces.
Leasing activity in 2024 for central and southern Marin was largely driven by renewals, signaling tenants’ commitment to staying in the North Bay. However, new tenant activity remained limited, with most movement in the market coming from companies downsizing or rightsizing rather than expanding.
Demand from San Francisco-based businesses moving to Marin has slowed, largely due to the high vacancy rates in San Francisco. While some companies still seek to relocate closer to executives and avoid higher taxes and occupancy costs, the overall migration has tapered off.
Although office occupancy trends improved compared to 2023, larger employers have been slow to fully implement return-to-office policies, though gradual change is expected to continue into 2025. In contrast, small businesses have embraced in-office work, driving office demand and commercial activity in the North Bay.
As a result, smaller office suites remain the most sought-after spaces. Many larger employers are still evaluating the right balance between remote work and in-person operations as they refine their long-term workplace strategies. With some form of hybrid work likely to remain for many companies, the key is developing a real estate strategy that best supports both team and business needs.
For example, configurations with large reception areas and oversized conference rooms have become much less common.
Looking ahead, expectations for increased sales activity in 2025 are rising, driven by forecasts of a lower federal funds rate and a prolonged period of reduced transaction volumes. Additionally, the high cost of tenant improvements makes it essential to have a business plan that supports the upgrades many buildings require.
A key opportunity in the market is Drakes Landing, a three-building, 128,000-square-foot office campus in Greenbrae, currently listed for sale. This property presents a prime chance for fresh capital to enter the Marin office market.
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