The San Luis Obispo office market has a vacancy rate of 3.4%. This vacancy rate is 0.4% lower than it was this time last year. This decrease of vacancy occurred because there was 30,000 SF of positive absorption and 4,800 SF of net deliveries.
Rents have increased 2.1% in the past 12 months and are currently around $29.00/SF. Nothing is under construction in the San Luis Obispo office market. In the past year, there have been 27 sales, which have traded for approximately $51.4 million in volume and 210,000 SF in stock.
Vacancy is 19.1% in 4 & 5 Star buildings, and 22,000 SF has been absorbed in this asset class over the past year. In 3 Star buildings, 5.6% of space is vacant, and 1,200 SF has been absorbed over the past year. Currently, 1.7% of 1 & 2 Star space is vacant, and 6,900 SF has been absorbed in this space type over the past 12 months.
Rents are around $34.00/SF in 4 & 5 Star buildings, $31.00/SF in 3 Star buildings, and $27.00/SF in 1 & 2 Star buildings. Year-over-year rent growth was 1.6% in 4 & 5 Star buildings, 1.7% in 3 Star buildings, and 2.4% in 1 & 2 Star buildings.
Of the 27 sales in the past year, none were of 4 & 5 Star buildings, 9 were of 3 Star buildings, and 18 were of 1 & 2 Star buildings. Current vacancy is lower than its trailing three-year average of 3.6%, which is also lower than the national trailing three-year average of 12.6%. The market is approximately 42,000 SF larger than it was three years ago, and is the result of roughly 43,000 SF of construction and roughly 1,000 SF of demolition. Rents have increased 6.5% over the past three years, higher than the national average of 2.8%. There have been 119 sales over the past three years, amounting to $148 million in volume and 560,000 SF of inventory.
CoStar's estimated cap rate for San Luis Obispo has averaged 7.9% over the past three years, which is lower than the current estimated cap rate of 8.7%.
The total San Luis Obispo office market comprises 6.7 million SF of inventory.
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