The first quarter of 2016 in Nevada County and the Sierra Foothills has indeed been happy. Many properties that have been on the market for an unduly long time are finally being placed into escrow, leased or sold. The elimination of these last remaining “legacy” properties leftover from the Great Recession should begin to cause upward pressure on lease and sale prices across the board. Hopefully this upward pressure will begin to spur new commercial construction, especially in retail and industrial product categories where vacancies are below 5%.
Retail sales volume kicked up dramatically at the end of last year, although this was due almost entirely to the +- $38M sale ($174/sf) of the Pine Creek Shopping Center (Raleys, JC Penny) to Pine Tree Commercial Realty out of Illinois (a very rare large sale in these parts!).
Other encouraging signs at the start of this year include a drop of 25 basis points in overall vacancy; and office vacancy finally beginning to fall.
On the supply side, small spaces under 5,000 SF remain adequately available, however, units above 5,000 SF are becoming quite scarce. There are only 7 commercial properties for sale in Grass Valley/Nevada City with contiguous space above 5,000 SF. The number of retail or industrial properties with space for lease above 5,000 SF total 8, and Class A properties are but a small subset of these. Speculative development remains non-existent, but as prices increase, “build-to-suit” development may commence as the best alternative for growing companies needing new or larger facilities.