Source: CoStar
By: Diana Bell

Prologis, the country’s largest owner of industrial real estate, is raising its projected earnings for the coming year by more than 2% as it pursues further rent increases and seeks to capitalize on a preference for smaller warehouse developments.

The real estate investment trust, headquartered in San Francisco, said rent growth will be about 4% globally, principally driven by the United States, though Europe is expected to outperform later in the year, Chief Financial Officer Thomas Olinger said Tuesday on a conference call with analysts discussing first-quarter financial results.

Prologis plans to spend $2 billion on starting development and $600 million on acquisitions but seeks to reduce its ownership in open-ended European funds from 28 percent to 24 percent to accommodate “partners and bring ownership in line” with a long-term target of 15% on the continent, Olinger said.

The REIT signaled a focus on smaller-sized warehouse space, with only about 25% of its portfolio comprising big-box regional facilities over 250,000 square feet. About two-thirds are less than 250,000 square feet.

“We are seeing higher rent change on roll under 250,000 square feet versus bigger box, and that spread is accelerating. We are well-positioned to capture that opportunity,” said Olinger.

Chairman Hamid Moghadam doesn’t see weakness in large space demand but said “there are some markets on the periphery like outlying corridors of Chicago where there are a lot of big buildings and market rent is softer now until those buildings get absorbed.”

The executives declined to name locations Prologis is considering, but Moghadam said the REIT is staying out of overdeveloped markets.

“The big boxes got their growth early in the recovery cycle. They are up significantly on 40% to 50% in the past four to five years. Now they are taking a back seat to the medium and smaller spaces,” he said.

The REIT’s strategy this year will be to push rents up. “Don’t be surprised if you see occupancy be a little lower throughout the year,” said Olinger. “We are going to make the right long-term decision, which is going to be pushing rents and extending term.” Prologis expects to end the year with an uptick in occupancy to 97.5%.

As the first developer to build a multistory warehouse in the United States, Prologis has faced headwinds with leasing the three-story, 589,000-square-foot Seattle building known as Prologis Georgetown Crossroads, where it is asking for rents in the range of $1.30 to over $2 a square foot.

Of the Seattle property, Olinger said, “We have done a 100,000-square-foot lease in this asset, and one lesson we’ve learned about this is there is a process that we have to go through with customers. It is a new product in a new location. We need to get a premium and we think we’ll get that premium, but deal gestation periods are long and they will continue to be long until customers are basically more accustomed to this product.”

The REIT said it will pursue opportunities with Seattle-based online retailer Amazon, its largest customer.

“Broadly we are seeing customers like Amazon and other customers focused on e-commerce with some network rollouts involve a combination of large buildings and a series of higher number of smaller buildings that are located close-in to larger population centers, all of which fit really well for our portfolio,” said Olinger.

Moghadam noted the smaller-footprint buildings these types of tenants are favoring offer more options in terms of parcel size and have higher clear heights with more mezzanine floors, which effectively increases space utilization.

Of the 772 million square feet Prologis had within its portfolio as of March 31, 59% was U.S.-based and is expected to generate 77% of the REIT’s net operating income for the year. Prologis has about $97 billion in assets under management.

Some of the largest shippers and household-name companies lease from Prologis, with Amazon in first place contributing to 3.6% of its net effective rent. Amazon leases about 20.7 million square feet. Shippers DHL, UPS and FedEx, retailer Home Depot and automaker BMW all rank within Prologis’ top 10 largest customers. Retail giant Walmart is in 11th place with 4.4 million square feet. And the U.S. government ranks 19th, with just over 1 million square feet.

This year, Prologis expects to complete just under 12.4 million square feet of development activity for properties it will fully own and manage spending $1.1 billion to do so. Roughly half of that development is planned for the Western United States. For 2020 and beyond, so far it has docketed 1.6 million square feet in development solely in the West.

Of the $239 million Prologis spent on development starts globally in the first quarter, just 41.2% is build-to-suit, showing a bulk of speculative industrial work.

Despite recording a decline in net earnings in the first quarter, the REIT saw rental revenues jump year-over-year to $696.8 million compared to $555.9 million. Occupancy was roughly flat at 96.8%, but Prologis leased 43 million square feet in the first quarter, compared to 33 million the in the same quarter a year ago.

The results follow what Moghadam called Prologis’ “strongest year ever” in 2018. The REIT embarked on $3.1 billion in new developments globally totaling 36 million square feet. The year also saw Prologis sell off an 86-property portfolio to MapleTree and acquire Denver-based industrial REIT DCT Industrial.

Link to article: Prologis Sees Opportunity in Smaller Warehouse Footprints

For its 7th year in a row, Calco Commercial has been named as a top brokerage firm in San Francisco.

Calco Commercial leased and sold 1,112,761+/- square feet of industrial, flex, office and land in 2018 comprising 66 transactions. Calco Commercial is a leading full-service industrial & commercial real estate firm with decades of experience in Landlord /Owner representation, 1031-exchanges, property management and property valuations. Let us help make the most of your real estate properties and investments.

Source: CoStar
By: Diana Bell

Related Companies, one of the largest developers in New York City and a significant builder nationally, established an opportunity zone fund targeting $250 million in investments to become the latest investor to take advantage of the program designed to spark development.

The move signals that interest keeps growing among investors to stream capital toward opportunity zones, which are federally mandated swaths of land in economically depressed areas that carry tax breaks for commercial real estate investors.

“Nationally there has been a spike in investor interest and activity for opportunity zone properties,” said Darin Mellot, head of research for the Americas at commercial brokerage firm CBRE. “There is really nothing I am questioned about more, except when is the next recession.”

Related declined to comment to CoStar News with further information explaining the investment goals of the new fund, reported in a Securities and Exchange Commission filing last week, such as which markets it is targeting.

Related is not the only big name in commercial real estate to launch a fund under the federal Opportunity Zone program. Normandy Real Estate Partners has a $250 million fund, Starwood Capital and RXR Realty have each launched $500 million funds, and CIM Group has a $5 billion fund.

Created by Congress in 2017 as part of the Tax Cuts and Jobs Act, the Opportunity Zone program encourages investments of at least five years in order to defer portions of capital gains taxes. For example, an investment of $10 million would, if sold after five years, be taxed on just $9 million. After seven years, the taxable amount would be $8.5 million. If held for at least 10 years and sold, gains would become tax-free.

“Opportunity zones are a generational type of incentive, not just for New York City but across the country. There are real advantages to be reaped with the program, and it’s no surprise that multiple institutional groups are rolling out funds. The investor pool for this strategy has expanded significantly,” said Victor Sozio, executive vice president in the investment sales group at commercial real estate services firm Ariel Property Advisors.

Of the 258 opportunity zone funds tracked by CoStar News, just over 33 percent plan to raise at least $100 million, and about 14 percent are targeting at least $250 million. Roughly 22 percent of the funds could be traced back to investors in New York and New Jersey, based on zip code. The 22 percent concentration combining New York and New Jersey outstrips the next-largest clusters of investors. About 8 percent of funds tracked hail from California, followed by 6 percent from Virginia.

New York state has a significant number of census tracts designated as opportunity zones, with 514. By comparison, California, a state three times the size of New York, has 879. There are 8,700 Opportunity Zones identified across the country.

New York City Investment

“In New York City, we’ve already seen increased activity in contract signings due to properties located in Opportunity Zones,” said Sozio, adding that his firm’s assignments under contract achieved 10 percent to 30 percent more in asking price because of stiff competition for Opportunity Zone investments.

But because of the cost to develop within New York City, neighborhoods in northern Manhattan and the Bronx are attracting a bulk of activity.

“The program is designed to incentivize development in depressed areas, but in New York City many of the areas that have been designated as Opportunity Zones are in areas that are already emerging markets, such as Mott Haven in the Bronx and Harlem, Washington Heights and Inwood in northern Manhattan,” Sozio said. “Inwood, for example, is benefiting from a double whammy of investor interest. It has been rezoned to allow more density and it is located in an Opportunity Zone. It is a neighborhood in Manhattan where pricing is still conducive to build rental buildings, and investors can also benefit from the Opportunity Zone structure. Inwood is a bit more attractive because you can buy land at $130 to $140 per buildable square foot.”

Manhattan has an Opportunity Zone in Hell’s Kitchen and one on the Lower East Side, but these areas below 96th Street prove challenging because their development sites have been trading based on condominium executions, noted Sozio.

“The program is not designed for a condominium developer because they don’t typically hold for 10 years. How do you secure a site that makes sense for a rental play in Manhattan? It is difficult because of pricing,” he said. “For parcels, you need to buy at $300 per buildable square foot in the Lower East Side to make it work … and sellers won’t sell because that is below market pricing. Those parcels are trading at $500 per buildable square foot.”

James Nelson, head of tri-state investment sales at commercial real estate services firm Avison Young, has predicted that 2019 will experience a 20 percent uptick in sales of development sites within the five boroughs of New York City because of opportunity zones.

“The investment possibilities that opportunity zones can provide in New York and around the country are huge to real estate and non-real estate investors. For real estate investors it is clear and intuitive. They look at the deal and invest. But for investors with non-real estate capital gains that cannot use a deferral program like 1031 exchanges, opportunity zones provide a great new avenue to accomplish a similar deferral with the possibility of back-end appreciation that they would not otherwise have,” explained Adam Sanders, an attorney specializing in investment transactions at law firm Rosenberg & Estis and its resident expert in opportunity zones.

Time Sensitivity

According to a 2019 real estate investment survey released by global business law firm Seyfarth Shaw, 32 percent of respondents said they will take advantage of the federal Opportunity Zone program as either an investor or a sponsor in 2019. Of that group, one-third are doing so to tap a new source of capital and a quarter are doing so to defer current taxable gains.

“Nationally the market is over a trillion dollars between capital gains of households and corporations, so there is significant capital moving into investment vehicles to take advantage of the capital gains savings,” said real estate adviser Greg Kraut, a managing partner of New York-based investment firm K Property Group and the CEO of bipartisan think tank Economic Policy Project.

One important caveat to opportunity zones is that they are time-sensitive. On December 31, 2026, a lump sum of taxes owed, based on hold times, are due.

“The tax benefits are time-sensitive, tax obligations are reduced more the longer you hold. You can only defer taxes for the period of time until 2026,” said Mellot. “Keep in mind that the IRS looks at two sets of gains, the original gain and the gain from the investment in the opportunity zone itself. There is no preferential tax treatment on the gain from the investment itself if you hold for 0-9 years.”

Facing an ever-dwindling timeline, the rush to invest nationally is being played out via pricing premiums on property trades.

“We are aware of some premiums being for paid for properties in opportunity zones, with some data showing a 5-percent to 10-percent premium on trades in select zones,” Mellot said of select zones nationally, but added he could not say for sure that finding is uniform.

Working It Out

But there is some uncertainty on key aspects of the Opportunity Zone framework, for which investors are still waiting on further guidance from the government. One significant area that has not been clarified is the federal government’s stance on refinancing an opportunity zone property. That would enable investors to recoup a bit of capital and would make it easier for smaller investors to play in the space.

“Certain ambiguities regarding technical details, such as whether that can be a distribution of proceeds during the hold period. If you can’t refinance and distribute proceeds during the hold, that doesn’t make much sense for investors. It especially puts smaller developers at a distinct disadvantage, because they don’t have the capital depth and scale to hold for a decade [compared to larger institutional investors.] Large funds have sufficient liquidity and scale to weather that,” noted Sozio.

A seminar scheduled for January to work out these kinks was canceled because of the government shutdown and investors are expecting additional guidance in the coming months.

One issue to watch, according to Kraut, is whether opportunity zones are artificially creating demand by forcing investment. Sanders said that the more complicated a transaction or development play, the more concern investors are showing until more guidance is released.

“For example, in New York City, a good amount of development is done on ground leases. Currently, New York views long term ground leases as real property but the IRS still has not confirmed that. This is holding up development on ground leases that want to utilize the OZ Program for investors,” he said.

Asked his perspective on pros and cons of opportunity zones, Sanders said, “Pros are that the Opportunity Zone program will provide an additional benefit for investors on deals that they were going to invest in already and potentially draw investors to deals for developments that are just on the edge of being viable. Cons are that some developers and investors are going forward without proper ongoing legal and accounting guidance.”

In light of the uncertainty, investors would be wise to step back from the fervor and scrutinize the merits of the investment strategy for a property or land parcel.

“Governors can designate up to 25 percent of their census tracts as opportunity zones, so there is a large volume of zones, but you still need to have an investment strategy. Sound investment principles still apply. Not all zones will make sense for investment. The OZ deals must have a market reason to make sense,” said Mellot.

“Investors should be cautious in these funds to make sure the underlying investment is viable, not just jump into it because it is located in an opportunity zone,” Sozio noted.

Link to article: Opportunity Zone

Calco Commercial has leased and sold 1,112,761+/- square feet of industrial, flex, office and land in 2018 comprising 66 transactions, with 20 transactions totalling 409,070+/- square feet in Q4 alone. Following are the notable Q4 2018 transactions: 30 Tanforan Avenue, S. San Francisco (215,539 +/- sf – industrial/lot lease), 695 Minnesota Street, San Franicsco (25,000+/- sf – warehouse/lease), 350 Harbor Way, S. San Francisco (24,600+/- sf warehouse/sublease), and 301 Toland Street, San Francisco (36,000+/- sf warehouse/lease). Calco Commercial is a leading industrial & commercial real estate firm with decades of experience in Landlord /Owner representation, and repositioning assets into net leased properties with in-place income streams. Let us help make the most of your real estate properties and investments.

Click here for the full Q4 San Francisco/Peninsula Industrial Market Report:

Source: CoStar | By: Mark Heschmeyer

The single-borrower market for commercial mortgage-backed securities is off to a strong start this year due largely to a major real estate investment trust merger as investors turn to more secure deals.

Brookfield Asset Management completed the $11.4 billion acquisition of Forest City Realty Trust in December. The purchase consisted of 6.3 million square feet of high-quality office space, 2.2 million square feet of retail space, 18,500 multifamily units, and five large-scale development projects.

Now this month, lenders on that deal have dominated the market, rolling up $2.43 billion of those loans into three bond offerings. Those three deals along with a fourth single-borrower deal has pushed the January single-borrower total so far to $3.07 billion.

That’s ahead of the pace at this time last year of $2.29 billion. Last year’s activity through the same time included nine smaller deals.

Two other single-borrower deals are in the pipeline for issuance, which should keep the pace ahead of last year.

As the commercial mortgage bond market has shown in the past two years, there is a shift toward single-asset, or single-borrower, deals.

Single-borrower bond offerings have become popular with investors partly because on an overall basis, institutional borrowers with higher quality assets are a large part of the sector. That means the bonds historically have lower default rates.

In addition, single-borrower deals have a higher percentage of financing with loan-to-value ratios greater than 60 percent, which is an enticement for borrowers. Such deals also offer borrowers longer terms with more extension options.

Multiple lenders on the Brookfield and Forest City deal contributed loans to the three offerings this year. Citigroup, Barclays Bank, Bank of America, and Deutsche Bank contributed office loans to two deals.

The collateral for the CAMB 2019-LIFE bond offering is a $1.17 billion mortgage loan secured by eight life science properties totaling 1.3 million square feet of Class A office and laboratory space on the campus of the Massachusetts Institute of Technology. The capital includes debt of $130 million subordinate to, and held outside, properties that were initially developed by Forest City.

The collateral for NYT 2019-NYT bond offering is a $515 million loan on the office and retail condominiums of the New York Times Building in Manhattan. The office condominium consists of floors 28 through 50, while the ground-floor retail condominium is 738,385 square feet.

The third bond offering this month tied to the merger is a $745.86 million pool of mortgages offered through Freddie Mac. Wells Fargo contributed to loans secured by 23 multifamily properties.

Source: CoStar / By: Molly Armbrister

Link to article: http://product.costar.com/home/news/shared/842689853

Google’s $1 billion acquisition of the Britannia Shoreline Technology Park in its hometown of Mountain View, California, gives the search engine giant the record for the two most expensive U.S. office deals this year, coming on the heels of its $2.4 billion purchase of the Chelsea Market retail and office building in New York.

The company, part of Alphabet Inc., occupies about 92 percent of the Britannia Shoreline, a 795,000-square-foot, 11-building office campus at 2011-2091 Stierlin Court, a few blocks from Google’s headquarters known as the Googleplex. The campus, in the heart of Silicon Valley, is a past home to business networking website LinkedIn and currently houses offices of Alexza Pharmaceuticals.

Google purchased the property for about $1,275 a square foot from Irvine, California-based real estate investment trust HCP Inc., which expected to make a profit of $700 million upon closing, according to a filing with the Securities and Exchange Commission.

Google’s spending on just two deals this year of about $3.4 billion, which its search engine shows is roughly the gross domestic product of the East African nation of Burundi, reflects the dominance of technology companies in U.S. real estate over the past decade. The tech industry accounts for about one-fifth of all office leasing completed across the country this year, according to brokerage CBRE Group Inc.

HCP, which is focused more on life science and medical offices and less on tech and traditional offices, said it plans to use the proceeds to repay debt and fund acquisition and development activity.

“At the time that we purchased it, there were more life-science tenants within the campus,” HCP Chief Financial Officer Peter Scott told investors on a conference call last month. “Over time, Google has taken over more and more of the space.”

He added that “it became more of a non-core suburban office asset for us that was a great piece of real estate to own, but to get the pricing that we got and to be able to recycle that capital into more of the core markets that we’re in, made sense to us.”

The company acquired the property about 11 years ago as part of its $3 billion purchase of European property investor Slough Estates USA. Slough had purchased the Shoreline property for about $200 million in 2005 from Equity Office, according to news reports.

Google does not have plans to move any employees or redevelop the property, according to someone familiar with the property but unauthorized to speak publicly about it.

Chelsea Market Deal

The sale is the second-largest office deal in the country by dollar volume in 2018, behind Google’s purchase earlier this year of New York City’s Chelsea Market for $2.4 billion as it plots its expansion in that city.

Chelsea Market, a former Nabisco factory, is home to a food hall and retail center on the ground floor with offices above. The 1.2 million-square-foot property sits across the street from the company’s Manhattan beachhead at 111 Eighth Ave., a 2.9 million-square-foot office building that takes up a full city block.

Google has not revealed its plans for the property, which is occupied by companies including Major League Baseball, but the site is entitled for an additional 300,000 square feet, or about eight stories. The company reportedly has plans for a major expansion in New York City by adding about 12,000 workers for a total of roughly 20,000, according to news reports.

Google and other technology giants have been gobbling up real estate in their backyards in Silicon Valley and across the country. Google has made two major leasing moves in the past few months, signing a lease for 300,000 square feet in San Francisco’s Landmark at One Market building this month and moving into 319,000 square feet in a renovated historic airplane hangar once owned by Howard Hughes in Los Angeles in October.

Google has also been amassing properties in downtown San Jose, California, for the development of a massive mixed-use project near the city’s Diridon Station, a major transit hub.

Meanwhile, the world’s biggest online retailer, Amazon, recently completed its year-long search for a major real estate expansion with plans to open major office hubs in the Queens borough of New York and in Arlington, Virginia.

Social media website provider Facebook has been busy expanding its headquarters in Menlo Park, California, which will total 1.4 million square feet upon the completion of the project’s third phase, and cloud-based software maker Salesforce recently said it has signed a lease for the entire office portion of a proposed tower at 542 Howard St. in downtown San Francisco.

Streaming entertainment service Netflix has expanded by more than 700,000 square feet in Los Angeles in the past few months. And Apple is on the hunt for another major campus somewhere in the country.

“With unemployment at 4 percent or lower in each of these markets, tech companies of all sizes are in a war for talent and must do their utmost to hold on to and recruit employees — and that means the best salaries, the best incentives, the best space and the best location,” said Robert Sammons, senior director of Northern California research for brokerage Cushman & Wakefield, in a statement. “That last point has generally meant an urban or even suburban location that is mixed-use, walkable, bikeable and near mass transit.”

Calco Commercial alone has leased and sold 334,290+/- square feet of industrial, flex, office and land in Q3 2018 comprising 19 transactions. Following are the notable Q3 2018 transactions: 155 De Haro Street, San Francisco (24,480 +/- sf – industrial/flex lease), 2150 Geneva Avenue, Daly City (162,000+/- sf – paved lot/lease), 800 Airport Boulevard, Burlingame (42,839+/- sf commercial building/sale), and 800 Cesar Chavez, San Francisco (54,027+/- sf commercial building/sale). Calco Commercial is a leading industrial & commercial real estate firm with decades of experience in Landlord /Owner representation, and repositioning assets into net leased properties with in-place income streams. Let us help make the most of your real estate properties and investments.

Calco Commercial recently completed a lease transaction at the 30 Tanforan Industrial Park in South San Francisco. Calco represented the Chariot, the Tenant, who will be occupying 51,524+/- square feet of building area and a total of 215,289+/- square feet (4.49 acres) of land. Chariot, a division of Ford Smart Mobility, is focused on transit solution by providing transportation options for commuters, enterprises and charters. Chariot operates across the Bay Area and is now offered in cities ranging from Austin to London.

Source: CoStar
By: Randyl Drummer
Date: October 18, 2018
Link to article: ProLogis

Prologis, the world’s largest warehouse and logistics property company, has begun to consider its leasing options should space suddenly come available as a result of recent bankruptcies by retailers or the consequences of a trade war with China.

So far, San Francisco-based Prologis has yet to find any “measurable impact” from trade issues or retailer bankruptcies this year, Prologis Chief Executive Hamid Moghadam told investors during the company’s third-quarter earnings conference. In the latest sign of struggles among retailers, Sears Holdings Corp. filed for Chapter 11 bankruptcy this week and announced another 142 closings of Sears and Kmart stores.

“If we search real hard, we can point to one or two companies who backed out of lease negotiations in the U.S., but the impact of those isolated cases was negligible in the context of our overall leasing volume,” Moghadam said.

“I can think of 20 other reasons why tenants stopped negotiating or dropped out of a negotiation, and certainly the trade stuff has not yet in any way translated to any action on the ground that we can tell,” Moghadam added.

The company isn’t waiting for any trade war to start before monitoring possible effects on customers. Prologis is already making sure it’s aware of how long it would take to fill space should customers start vacating.

The fact that the largest company of its kind is concerned enough to seek signs of effects of tariffs and bankruptcies reflects the cautious nature of corporations at this point in the extended economic expansion since the recession.

The company has found that “there are plenty of other customers that are waiting in line for quality space and are frustrated by the shortage of suitable options,” Moghadam said.

The Trump Administration has levied tariffs on a total of $250 billion of imported goods from China, which has retaliated by announcing tariffs on $110 billion of U.S. exports.

About 25 percent of the most recent round of tariffs enacted in September is on consumer goods, unlike earlier announcements that mostly targeted materials and intermediate goods, according to Peterson Institute for International Economic, a Washington D.C.-based think tank.

Prologis has said that while a protracted trade war could increase the likelihood of a global downturn, about three-quarters of its U.S. customers are focused on local and regional business activity, including e-commerce delivery, rather than international trade.

Prologis now expects companies to take 260 million square feet of industrial space in the U.S. this year, 15 percent more than 2017, even as newly built space falls an estimated 10 million square feet short of tenant demand. As a result of the tight market, Prologis has been able to keep more than 80 percent of its tenants when their leases expire, despite imposing average rent hikes of more than 11.5 percent.

Not all companies in that industry can operate with that level of efficiency, meaning that Prologis could have a better chance of withstanding any downturn than smaller rivals.

“The markets are really strong and that’s why we’re getting these increases,” Moghadam said. “And not every discussion with every tenant starts out with the intention of them staying. In fact, many of them when they hear about the new rent get a little spooked.”

He said many tenants come back to Prologis and renew after shopping the market and failing to find lower rents.

Among the major commercial property types, only apartment and industrial real estate investment trusts have gained ground in their stock prices since the beginning of the year, according to National Association of Real Estate Investment Trust data.

Matt Kopsky, an analyst for Edward Jones, noted that about 30 percent of new Prologis leasing activity is related to space needed to fill online orders, with Amazon the company’s largest tenant at about 3 percent of total revenue from rents across its portfolio. The company also has demand from overseas to help insulate it from any downturn.

“Despite increasing competition from new construction and trade-tariff concerns, we think demand will remain robust,” Kopsky said. “Increased global trade is also a significant factor, particularly overseas, since Prologis leases space to third-party logistics firms providing warehouse and distribution to multinational corporations.”

According to Bisnow, “tech and life sciences companies made up 67.1% of total office leasing activity in Silicon Valley and 64.6% in San Francisco for 2017 through midyear 2018.” With nearly daily headlines of Facebook and other tech giants snapping up huge swaths of space in San Francisco and its surrounds, it is no surprise that the Bay Area’s tech leasing activity is approximately 40% higher than the nation.

Tech, media, and e-commerce firms, both large and small, understand that in order to be competitive and attract talent, they need a physical presence in the Bay Area. San Francisco Bay Area continues to hold the title for most tech jobs in the United States. Real estate professionals project that tech will continue to expand in Silicon Valley, although solutions to issues such as affordable housing/cost of living will need to be explored to retain the skilled labor force necessary for start-ups and big tech.