T
he North Bay commercial real estate landscape is undergoing a transformation, with distinct trends emerging across Marin, Sonoma, and Napa counties. While some areas are experiencing growth, others face challenges.

    In Marin County, the apartment market has seen a surge in sales, but prices have dropped and rents have decreased due to increased vacancies. In contrast, office spaces in southern and central Marin remain stable, with rising rental rates and limited tenant activity. However, redevelopment into residential properties is gaining traction locally, driven by employers leaving San Francisco and other cities.

    Sonoma County's office market has remained relatively flat over the past three years, despite hybrid work models leading to smaller leases as companies downsize their footprints. Meanwhile, industrial real estate vacancies have increased in north Santa Rosa, Windsor, and Healdsburg due to company departures. However, some major deals are taking large spaces off the market.

    In Napa County, downtown Napa is undergoing significant changes with new hotels, residential developments, and retail shifts aimed at boosting tourism and business. Leasing activity has surged, driven by demand for high-quality office and industrial spaces, despite a slight rise in vacancy rates due to slowed wine industry demand.

    Experts from top commercial real estate firms offer insights into their respective markets:

    * Sonoma County: Dave Peterson notes that Santa Rosa office real estate vacancy has remained flat, while rental rates have stabilized. Shawn Johnson highlights increased vacancies in north Santa Rosa, Windsor, and Healdsburg, but also mentions big deals taking space off the market.

    * Petaluma: James Manley reports high vacancy rates, but increased transactions and buyer flexibility signal renewed confidence in industrial, office, and flex spaces.

    * Rohnert Park/Cotati: Kevin Doran notes flat conditions with rising vacancies, but steady demand for industrial and retail spaces presents new opportunities amid economic uncertainty.

    * Sonoma County multifamily: Scott Gerber reports stagnation due to high borrowing costs, but expects stabilization in 2025 as investor activity resumes.

    Napa and Solano counties have seen a surge in leasing activity and new construction, driven by demand for high-quality office and industrial spaces. Glen Dowling, Matt Bracco, and Chris Neeb of JLL note that despite a slight rise in vacancy rates, the market remains strong.

    As federal leadership and policies change, uncertainty surrounds lending restrictions, interest rates, and tariffs impacting business investment and growth in Marin, Sonoma, and Napa counties.