O
ffice and industrial real estate vacancies increased in north Santa Rosa, Windsor, and Healdsburg due to company departures. However, significant deals have taken a substantial amount of space off the market. According to Shawn Johnson of Keegan & Coppin Co. Inc., the north Santa Rosa corridor office market saw a notable increase in vacancy at the end of 2024.

    The primary cause was the availability of two large flexible-use buildings totaling 126,585 square feet previously occupied by Medtronic on Brickway Boulevard. This led to an overall vacancy rate of 11.8%, up from 6.4% at the end of 2023. If these two Medtronic buildings were excluded, office vacancy in the submarket actually declined slightly to 5.9%.

    The most significant office lease last year was secured by the county of Sonoma, which leased approximately 73,000 square feet of the former American AgCredit headquarters building at 400 Aviation Blvd. The county also leased a 40,000-square-foot office building at 463 Aviation in late 2023.

    Rents ranged from $1.80 to $2.25 per square foot on a full-service basis. Several office building sales took place, including the purchase of a former American AgCredit building by the county and the sale of a two-story, 9,950-square-foot building at 800 Edgewood Place in Windsor.

    Industrial real estate in the North Santa Rosa Corridor saw significant activity in 2024, with industrial vacancies nearly tripling to 9.1% at year-end from 3.3% in the fourth quarter of 2023. However, leasing activity has picked up, which should lead to a significant improvement in 2025.

    The most notable lease was secured by One Up Sales & Marketing for a food processing facility at the former La Tortilla Factory site. Platt Electric Supply leased 31,626 square feet at 3541 Regional Parkway, and Neilmed leased 27,790 square feet of a newly constructed spec industrial building at 5496 Skylane Blvd.

    The most significant sale was the former Syar industrial plant at 13611 and 13666 Healdsburg Ave., which consisted of over 88 acres of industrial zoned land and over 15,000 square feet of warehouse buildings. This site has potential for rezoning to commercial and residential uses in the future.

    Another significant sale was the 40.57-acre zoned industrial park by Airport Business Center to OSL Properties LLC, which plans to develop a residential project called Airport Village. Rental rates are softening for older established properties but holding firm for new construction, ranging from $1.15 to $1.25 per square foot on a gross basis.

    Industrial build-to-suit leases have become less of an opportunity due to the lack of available sites in the area. A portion of the old Standard Structures property off Shiloh Road in Windsor sold to Brennan Investment Group in 2022, which plans to build three industrial buildings totaling 477,093 square feet of class A industrial space.

    Permit Sonoma continues to process the Sonoma County Airport Area Specific Plan update, which has been delayed but is expected to resume processing later this year or possibly in 2026. The update was well underway when it stalled several years ago. Property owners are advised to be part of the process to avoid potential zoning changes that could negatively impact their property use and long-term values.

    The Sonoma County airport continues to increase ridership and destinations, with Alaska Airlines offering flights between Santa Rosa and various cities, including Burbank, Los Angeles, Orange County, Portland, San Diego, and Seattle. American Airlines connects to Dallas and Phoenix, while Avelo Airlines links to Burbank, Las Vegas, Palm Springs, Bend, Boise, Salt Lake City, and Ontario in Southern California.