INVESTMENT IN SONOMA COUNTY
 
 

 

 


Why invest in Sonoma County? 

 

Simply put, quality-of-life.  Sonoma County is one of the most beautiful, economically dynamic, and temperate places to live in the world.  Offering world-class wines; a diverse economy with strong tech, service, agricultural, tourism, medical, retail and government components; spectacular geography including the Pacific Ocean, rolling oak covered hills, a coastal range, vineyards and redwood forests; and a Mediterranean-like climate that allows year-round outdoor living; Sonoma County is a magnet to those attracted to a semi-rural environment with immediate access to San Francisco. 

 

Sonoma County tends to function as a commercial real estate market with only a loose correlation to real estate values in the rest of the Bay Area.  Commercial property in Sonoma County tends to appreciate more slowly than in other parts of the Bay Area, and in down markets, hold value better.  Both quick appreciation and the opportunity for adding value are uncommon.  This generally a buy-and-hold market.  In comparison to other Bay Area counties however, Sonoma County remains quite attractive because of comparatively lower real estate values. Inevitable growth throughout the Bay Area will continue to flow into the county, for economic as well as quality-of-life reasons. Although infrastructure issues such as freeway expansion, airport expansion, water supply, and wastewater disposal are being actively debated, Sonoma County will continue to grow and prosper.

 

Some very general investor guidelines for the different inventory types are listed in the following table.  Variations are due to location, age and quality of improvements, and the creditworthiness of tenants.

 

Inventory Type

Unit Cost (for purchase)

Rental Range

Selling Cap Rates

Multi-family:

(Class B, +16 units)

$90,000 to $150,000 per unit

1/1 - $750 to $895

2/1 - $900 to $1000

2/2 - $1000 to 1100

 

6.5% to 7% (fully leased inventory)

Multi-family:

(Class A, less than ten years old, +50 units)

 

$120,000 to $180,000 per unit

1/1 - $850 to $950

2/1 - $950 to $1050

2/2 - $1100 to 1200

5% to 6% (fully leased inventory)

Class A/B Office:

(to 30,000 s.f.)

 

$125 to $180 per square foot.

$1.65 to $2.10 Fully Serviced

7.5% to 8% (fully leased inventory)

Class A/B Office:

(over 30,000 s.f.)

 

$100 to $150 per square foot.

$1.65 to $2.10 Fully Serviced

7.5% to 8% (fully leased inventory)

Industrial:

 

 

$80 to $100 per square foot.

$.60 Gross to $.70 NNN

8% to 9% (fully leased inventory)

Retail:

 

 

$150 to $250 per square foot.

$1.25 Gross to $2.25 NNN

Up to 10% (fully leased inventory)

Triple Net:

(Very limited availability)

 

$200 per square foot an up

$2.00 NNN and up

7% to 7.75% (fully leased inventory)

 

This brief summary of commercial real estate in Sonoma County provides a general basis for the comparison of investment alternatives here and elsewhere.  If you are intending to invest locally, please give us a call. We can provide a much more detailed analysis of the current market.  For demographic and other information for Sonoma County, please visit our Links & Other Resources page.  If, as the saying goes, real estate is all about “location, location, location,” then one can do no better to invest in Sonoma County.

 

 

Regional Map

 

Sonoma County

 

Santa Rosa