Downtown San Rafael Office Space Thomas Norian Marin County Investment Real Estate Broker

Downtown San Rafael Office Space

Open my Descriptive Marin County Commercial Real Estate Map to follow the discussion as it relates to Marin County

Downtown San Rafael has a combination of many sized and qualities of buildings. In terms of office space you have some of modern “Class A” construction and as well as space in two story, 100 year old, retail buildings and every-type in between.

I use this example to touch on how our regional market has made room for smaller size tenancies over the years even as newer buildings and developments soak up demand from larger companies needing tens of thousands of square feet of space.

Pictured here is the 8 story, class A , Courthouse Square building built in 1975 on the site of the old county building that was replaced with the Frank Lloyd Wright Civic Center complex 5 miles north in the Terra Linda portion of san Rafael,

There were 5 or 6 other office buildings built in this of this era. They are 3 to 5 stories high but still “Class A” construction. It wasn’t till the 2000’s that another wave other large high quality buildings were built. (see Marin Biotech)

Courthouse Square has maintained relatively high occupancy over its history. Much of it’s space is divided into 1500 to 4000 foot suites that stay full with local law firms and financial companies that are very common to Marin and often serve far larger geographic areas, even nationally from their small suites. Those sorts of floor divisions are great for maintaining high occupancy rates in our small market but the lack of audited financials and increased number of transactions per square foot can drive large property owners like insurance trust funds crazy. That sort of tenant is an opportunity for a smaller real estate operation who is comfortable leasing to individuals without public audited balance sheets and the like.

I’ve leased all three qualities of space in Marin County and I wouldn’t have a strong opinion about the economic advantages of one over another. The nature of management of the different qualities of buildings is quite different however.

The Class A buildings will frequently be owned by large trusts and leased to public companies with both parties having a strong desire to understand the financial security and operating history of their counter-party. A controller for a fortune 500 company must be assured that the operations of a branch occupying 2 floors in a building with a hundred employees won’t be interrupted by ineptitude of building management with plumbing or permitting issues effecting occupancy dates. The landlord wants to know that the tenant will have the millions of dollars over the term of the lease available. Building mechanics and approved contractors, and strict fire codes are vital parts of building out space for new tenants, and almost always entirely re configuring space for a subsequent tenant.

Class B buildings, especially in Marin and the Northbay where I’ve operated will often be owned by development companies with developer individuals owning major personal stakes with different partners for each building if sometimes necessary. They’ll have teams of contractors but they’ll likely have their own people closely involved and be able to have more flexibility in selecting lower cost suppliers without needing as much paper work in terms of bonding and insurance as you’d have in the class A space.

Small office buildings and much of the Class C space is operated by owners with less construction background, often professionals in other fields occupying parts of buildings and leasing the remainder. They’ll often operate more the way you would if you owned small rental real estate buildings.

The other obvious difference between the classes of buildings is the amount of money you’ll need. Class A buildings are the domain of individuals and organizations with perhaps many tens of millions of dollars, the class B buildings can be owned by people with lower tens of millions of dollars or small partnerships with investors contributing hundreds of thousands of dollars each. Class C buildings are often sold in the millions of dollar range, and perhaps less for a small building with a couple dentists and an accountant in it.

I haven’t been involved with the sale of any class A building but I’ve been involved in some shape with some smaller class B buildings and numerous class C buildings. I’ve done enough to have thoughts to share with you individually.