Insignia/ESG's research shows that the county's flex/R&D sector experienced 198,893 sf of positive net absorption in the first quarter of this year, while the office market reported just 143,281 sf of positive net absorption. In addition, availability of flex/R&D space has dropped from 15.16% to 14.76%, marking a trend that is more than six quarters long, while availability in the office market stands at 17.4%. This figure does reflect a slight decline, however, as office availability contracted for the first time in a year from 17.8% in the previous quarter.
According to Insignia/ESG, availability in the office market "is at a level not seen since the recession and overbuilding fiasco of the early 1990's, rental rates are eroding steadily and overall leasing activity has slowed to a crawl." The R&D/flex sector, meanwhile, is experiencing "prolonged diminishing availability" and rapidly dropping vacancy levels. While most flex facilities usually contain an office component that encompasses more than 30% of the total rentable sf, an increasing number of flex buildings are being designed with the office user in mind, say Insignia/ESG's researchers.
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