The following reflects Peninsula industrial and R&D market conditions as of Q3 2026.
The Peninsula industrial market in Q3 2026 experienced rising vacancy and higher net absorption year over year, while rental rates and construction deliveries held steady. Explore our full Peninsula industrial and R&D market report for deeper insights into leasing activity, sale transactions, and submarket performance.
Frequently Asked Questions
What is the industrial vacancy rate in the Peninsula in Q3 2026?
The Peninsula industrial direct vacancy rate was 7.8% in Q3 2026, up from 7.4% in Q2 2026 and 7.5% in Q3 2025, a year-over-year increase of 30 bps, according to Kidder Mathews research. Total vacancy, which includes sublet space, was 9.1% across 30,646,311 SF of industrial inventory. San Bruno/Millbrae had the highest total vacancy rate at 22.6%, while San Mateo had the lowest at 4.7%. (Data source: CoStar)
What is the industrial availability rate in the Peninsula in Q3 2026?
The Peninsula industrial total availability rate was 9.2% in Q3 2026, down from 10.2% in Q2 2026 but up from 8.7% in Q3 2025, a year-over-year increase of 50 bps, according to Kidder Mathews research. Burlingame had the highest submarket availability rate at 15.8%. (Data source: CoStar)
What are average industrial asking rents in the Peninsula in Q3 2026?
The average direct asking lease rate for Peninsula industrial space was $1.96 per SF per month (NNN) in Q3 2026, compared with $1.92 in Q2 2026 and $1.96 in Q3 2025, according to Kidder Mathews research. Submarket averages ranged from $1.74 per SF in South San Francisco to $2.95 per SF in Menlo Park. (Data source: CoStar)
How much industrial leasing activity occurred in the Peninsula in Q3 2026?
Peninsula industrial leasing activity totaled 347,030 SF in Q3 2026 and 986,346 SF year to date, up 27.2% from 775,321 SF in the same period of 2025, according to Kidder Mathews research. Brisbane/Daly City led the quarter with 126,926 SF of leasing activity, followed by San Mateo with 85,457 SF and South San Francisco with 70,230 SF. (Data source: CoStar)
What was industrial net absorption in the Peninsula in Q3 2026?
Peninsula industrial net absorption was -50,823 SF in Q3 2026, meaning more space was vacated than newly occupied during the quarter, according to Kidder Mathews research. Year-to-date net absorption was positive at 39,819 SF, compared with -362,100 SF in the same period of 2025. South San Francisco recorded the largest quarterly decline at -139,835 SF, while San Mateo posted the strongest gain at 84,750 SF. (Data source: CoStar)
What was the largest industrial sale in the Peninsula in Q3 2026?
The largest industrial sale in the Peninsula in Q3 2026 was 161 Starlite St in South San Francisco, a 64,103 SF property that WareSpace purchased from A&S Realty for $16,500,000, or $257 per SF, according to Kidder Mathews research. The next-largest significant sale was 838 Mitten Rd in Burlingame, which sold for $6,875,000 ($507 per SF). Industrial sales volume totaled 141,146 SF in Q3 2026 and 563,082 SF year to date, down 37.2% from 895,949 SF in the same period of 2025. (Data source: CoStar)
What was the largest industrial lease in the Peninsula in Q3 2026?
The largest industrial lease reported in the Peninsula in Q3 2026 was Source Foundry’s new lease of 116,095 SF at 526-534 Eccles Ave in South San Francisco, with a transaction date of August 2026, according to Kidder Mathews research. Two other significant leases were in Brisbane: Pitco Foods renewed 89,200 SF at 385 Valley Dr in July 2026, and Parallax Energy signed a new lease for 79,300 SF at 240-246 Valley Dr in July 2026. (Data source: CoStar)
What is the R&D vacancy rate in the Peninsula in Q3 2026?
The Peninsula R&D direct vacancy rate was 22.2% in Q3 2026, with a total vacancy rate of 23.8% and a total availability rate of 25.2% across 14,352,378 SF of inventory, according to Kidder Mathews research. San Bruno/Millbrae had the highest direct vacancy rate at 60.1%, while Burlingame had the lowest at 4.3%. (Data source: CoStar)
What are average R&D asking rents in the Peninsula in Q3 2026?
The average direct rental rate for Peninsula R&D space was $5.68 per SF per month in Q3 2026, according to Kidder Mathews research. Submarket averages ranged from $3.62 per SF in Burlingame to $6.65 per SF in South San Francisco. (Data source: CoStar)
What were R&D net absorption and leasing activity in the Peninsula in Q3 2026?
Peninsula R&D net absorption was -27,424 SF in Q3 2026, meaning more space was vacated than newly occupied, while leasing activity totaled 83,203 SF for the quarter, according to Kidder Mathews research. Year to date, R&D net absorption was 476,220 SF and leasing activity was 865,631 SF. Belmont/San Carlos led the quarter in leasing activity with 34,402 SF and led year-to-date net absorption with 298,814 SF. (Data source: CoStar)
How did Peninsula industrial market indicators change year over year in Q3 2026?
Peninsula industrial vacancy and absorption both moved up year over year in Q3 2026, while rental rates and construction deliveries were unchanged, according to Kidder Mathews research. Direct vacancy rose 30 bps to 7.8%, and year-to-date net absorption of 39,819 SF compares with -362,100 SF in the same period of 2025. The report does not provide a square footage figure for space under construction. (Data source: CoStar)
Last updated: Q3 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.
Q3 2026 Peninsula Industrial and R&D Market: Key Data Points
Explore our full Peninsula industrial and R&D market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Industrial Vacancy: Direct vacancy was 7.8% in Q3 2026, up 30 bps year over year from 7.5%, while the total availability rate was 9.2%, down from 10.2% in Q2 2026.
- Industrial Net Absorption: Net absorption was -50,823 SF in Q3 2026, but year-to-date net absorption of 39,819 SF compares with -362,100 SF in the same period of 2025.
- Industrial Leasing Activity: Leasing activity totaled 347,030 SF in Q3 2026 and 986,346 SF year to date, up 27.2% from 775,321 SF in the same period of 2025.
- Industrial Asking Rents: The average direct asking lease rate was $1.96 per SF per month (NNN), up from $1.92 in Q2 2026 and equal to $1.96 in Q3 2025.
- Biggest Industrial Sale: WareSpace purchased 161 Starlite St in South San Francisco from A&S Realty for $16,500,000 ($257 per SF), a 64,103 SF property.
- R&D Vacancy and Availability: R&D direct vacancy was 22.2%, total vacancy was 23.8%, and the total availability rate was 25.2% across 14,352,378 SF of inventory.
- R&D Rents and Leasing: The average direct rental rate for R&D space was $5.68 per SF per month, and leasing activity totaled 83,203 SF in Q3 2026 and 865,631 SF year to date.
Industrial Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
Total Available Rate |
Q3 2026 Total Net Absorption (SF) |
YTD Total Net Absorption (SF) |
Q3 2026 Leasing Activity (SF) |
Avg Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Brisbane/Daly City | 4,732,108 | 3.8% | 6.9% | 6.6% | 16,124 | -96,894 | 126,926 | $1.81 |
| South San Francisco | 12,056,909 | 9.5% | 9.8% | 10.4% | -139,835 | 75,247 | 70,230 | $1.74 |
| San Bruno/Millbrae | 985,597 | 22.6% | 22.6% | 22.6% | 9,542 | 9,542 | 0 | $1.88 |
| Burlingame | 3,227,535 | 7.5% | 11.0% | 15.8% | 40,644 | 113,959 | 16,737 | $1.91 |
| San Mateo | 3,670,193 | 3.0% | 4.7% | 4.8% | 84,750 | 79,431 | 85,457 | $2.14 |
| Belmont/San Carlos | 999,655 | 12.2% | 13.2% | 11.3% | -22,783 | -75,975 | 32,396 | $2.37 |
| Redwood City | 2,753,977 | 5.2% | 5.2% | 6.4% | -15,367 | -52,998 | 15,284 | $2.12 |
| Menlo Park | 2,220,337 | 10.7% | 10.7% | 12.3% | -23,898 | -12,493 | 0 | $2.95 |
| Total | 30,646,311 | 7.8% | 9.1% | 9.2% | -50,823 | 39,819 | 347,030 | $1.96 |
R&D Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
Total Available Rate |
Q3 2026 Total Net Absorption (SF) |
YTD Total Net Absorption (SF) |
Q3 2026 Leasing Activity (SF) |
Avg Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| South San Francisco | 5,311,292 | 26.2% | 27.6% | 28.3% | 19,822 | 223,578 | 11,100 | $6.65 |
| San Bruno/Millbrae | 530,900 | 60.1% | 60.1% | 60.1% | 0 | 4,395 | 0 | $4.17 |
| Burlingame | 853,514 | 4.3% | 4.3% | 3.4% | -14,941 | -21,300 | 7,480 | $3.62 |
| Brisbane/Daly City | 783,882 | 27.0% | 27.0% | 31.5% | 0 | 72,170 | 0 | $5.85 |
| San Mateo | 277,739 | 5.0% | 16.2% | 21.1% | 0 | 17,345 | 0 | $6.03 |
| Belmont/San Carlos | 2,152,964 | 18.8% | 21.8% | 20.9% | -9,960 | 298,814 | 34,402 | $5.57 |
| Redwood City | 2,213,999 | 14.7% | 17.4% | 17.6% | -39,787 | -9,838 | 23,821 | $4.64 |
| Menlo Park | 2,228,088 | 21.9% | 21.9% | 27.9% | 17,442 | -108,944 | 6,400 | $5.53 |
| Total | 14,352,378 | 22.2% | 23.8% | 25.2% | -27,424 | 476,220 | 83,203 | $5.68 |
Significant Sale Transactions Q3 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| 161 Starlite St | South San Francisco | 64,103 | $16,500,000 | $257 | WareSpace | A&S Realty |
| 838 Mitten Rd | Burlingame | 13,552 | $6,875,000 | $507 | 824 Mitten Rd, LLC | 838 Mitten Road, LLC |
| 1011 Douglas Ave | Redwood City | 3,335 | $2,173,500 | $651 | 1011 Douglas, LLC | RC Tandem, LLC |
Significant Lease Transactions Q3 2026
| Property | Submarket | SF | Transaction Date | Lease Type | Tenant |
|---|---|---|---|---|---|
| 526-534 Eccles Ave | South San Francisco | 116,095 | August 2026 | New Lease | Source Foundry |
| 385 Valley Dr | Brisbane | 89,200 | July 2026 | Renewal | Pitco Foods |
| 240-246 Valley Dr | Brisbane | 79,300 | July 2026 | New Lease | Parallax Energy |
Data as of Q3 2026. Source: CoStar. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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