The retail market in Marin County remained very stable throughout 2005 with continued strong tenant demand for the top performing shopping centers.

With a base of approximately 4.8 million square feet for centers over 10,000 square feet (48 properties) that Terranomics Retail Services tracks, the overall vacancy rate was approximately 3.3 percent. This number is a slight improvement over 2004, as many of the larger vacant retail spaces in the county were absorbed.

Rental rates continued to climb to historical high levels, with some rates climbing to $48 to $55 per square foot for new and remodeled centers, and triple net expenses typically increased due to the rising cost of property and liability insurance.

The City of Novato was looking to increase its sales-tax-generating retail presence with the announcement of two major projects in 2005 in its downtown.

The Prado Group of San Francisco is developing the new Trader Joe's project called the Village Novato located at Olive and Redwood. This will be the second location for Trader Joe's, which currently operates a store in the Montecito Shopping Center in San Rafael.

Additionally, the Lalanne Group and Signature Properties received entitlements for the new Whole Foods mixed-use project at the former Pini Mill and Railroad Depot sites, which will also include 125 condominiums.

This will be Whole Foods' third location in Marin as it currenly operates freestanding stores in Mill Valley and San Rafael.

The City of San Rafael, which is also looking to increase its retail sales-tax base, approved the second location for Best Buy in Marin County, and the electronics retailer is under construction on its new 32,000 square feet facility at the former Labcon site fronting Highway 101. Anchored by its new Safeway, Strawberry Village has almost completed its expansion and remodel with new tenants such as Smith & Hawken, Pizza Antica, Jos A. Banks and the Spanish Table.

The Corte Madera Town Center is replacing Marshalls with a Barnes and Nobel Superstore, and a tenant is yet to be named for the rormer Good Guys space. The Village at Corte Madera continues with its tenant upgrade program as the center is part of the company's high-end Lumenati portfolio.

Vintage Oaks at Novato and the City of Novato continue to trade in Marin at historically low cap rates of 6.5 percent and below. This phenomenon continues to demonstrate that buyers are willing to pay top price for properties that are virtually impossible to duplicate in this entitlement sensitive area with little or no vacant land to develop.

In summation, the high income and education levels of the residents of Marin County continue to make it an attractive retail market for both investors and tenants. This year will most likely continue to follow this positive trend.

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