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Category: industrial real estate (107)

Dec

San Francisco CRE News: Potrero Hill industrial site to become new “maker” hub

Source: San Francisco Business Times
By: Cory Weinberg
Dated Posted: December 10, 2015

An acre of warehouses, sheds and gravel bunkers near the base of Potrero Hill could become home to San Francisco’s next hub of “maker” and tech office space, according to city filings.

The San Francisco Gravel Co. is in early talks with the Planning Department about whether its sprawling South of Market property at 552 Berry St. would qualify for the city’s 2014 legislation incentivizing the new construction of manufacturing space by allowing more lucrative offices on underutilized land.

It would be the second project to take advantage of the legislation now that Kilroy Realty Corp. is starting to develop 100 Hooper nearby with two-thirds slated for office use and one-third for “production, distribution and repair.” That’s a zoning designation reserved in part for manufacturing and light industrial companies that typically can’t afford high rents.

The Berry Street property is zoned for PDR and could not see offices rise on the site without the 2014 legislation.

“Based on an investigation of the property’s permit history and informal interpretation by the Planning Department staff, this property does indeed qualify under the criteria for the legislation. Further, it meets the purposes of the legislation in that SF Gravel Company had a very low employment density,” according to a letter to the city penned by consultant Badiner Urban Planning.

The gravel company, which has inhabited the property for nearly a century, also has tapped developer SKS Investments to study the site, according to the “zoning determination” letter sent to the Planning Department. It’s unclear how large the development would be if proposed.

SKS is accustomed to turning former industrial spaces into tech office beacons. The San Francisco-based company recently redeveloped the historic McClintock building – formerly used to manufacture dresses – and leased it up to biotech firm Invitae for laboratory use. It also transformed the former jewelry at 888 Brannan St. into office space for Airbnb.

Dan Kingsley, a managing partner for SKS, said “our plans are not firm” and declined to comment further.

San Francisco’s South of Market area could begin to see several office developments attached to new manufacturing spaces. Not only is Kilroy building a major property, but the city is planning to require some PDR in new large office developments under next year’s Central SoMa rezoning plan.

Until now, new PDR space has typically been economically infeasible to develop because of the law rents it generates. However, the 2014 legislation permitting office development to help fund PDR space is starting to change that.

In addition, the city has seen the rise of manufacturing companies with venture capital backing – creating a class divide with more typical ‘makers.’ That trend has concerned the like of SF Made, the influential advocacy group that will develop ‘maker’ space at 100 Hooper.

Link to article: Maker Hub coming to Potrero Hill

Oct

National CRE News: Office Demand Reaches Pre-Recession Peak

Vacancy Rate Dips for Top Quality Space as Office Absorption Remains Well Ahead of New Construction

Source: CoStar
By: Randyl Drummer
Dated Posted: October 21, 2015

The U.S. office market logged 29 million square feet of net absorption in the third quarter, the second-highest quarterly total since 2006, with demand for office space from expanding companies roughly doubling the amount of new office supply added by developers.

The 68 million square feet of net office absorption in the first three quarters of 2015 compares with an average of just 30 million square feet during the same periods in 2005 through 2007, considered to be the height of the last office boom. Meanwhile, the national office vacancy rate continued its slow and steady decline, dipping to 11% for the third quarter of 2015, down another 20 basis points from midyear and a 60 basis point decline from third-quarter 2014.

A large majority of U.S. office submarkets, 65%, saw declining office vacancy in the third quarter, while 52% of U.S. submarkets now have lower office vacancy than during the 2006-07 peak, with most metros posting solid rent growth.

Those were among the key findings in CoStar’s State of the U.S. Office Market Third Quarter 2015 Review and Forecast presentation this week, which aslo noted one major difference from previous office market cycles: the average vacancy rate for high-quality 4- and 5-Star office space built since 2008 has remained flat, even though the 42 million square feet of new supply delivered in the first three quarters is nearly 40% above the same period in 2005-2007, said Walter Page, CoStar Group, Inc. director of U.S. research, office.

“We’re at a rare point. Vacancy in new space has flat-lined since about 2013. What’s interesting about that is the supply pipeline has not caused the rate to spike up nationally, unlike other market cycles,” said Page, who was joined by Aaron Jodka, senior manager, market analytics and Managing Director Hans Nordby for the the office market analysis.

“Office tenants clearly want this new space and are willing to pay for it because obviously, they’re leasing it up,” Page added.

Jodka added that demand for 4-and 5-Star space grew at 2.5% between third-quarter 2014 and the most recent three-month period, compared with 1.4% in the overall office market and nearly three times the demand growth rate achieved for 1-, 2- and 3-Star properties.

Nordby noted that despite a rise in rental rates, total occupancy costs as a percentage of company profits remain at an all-time low as companies continue to put more workers into fewer square feet, which is allowing firms to continue leasing high-quality space.

Among individual markets, Dallas stood out by posting the strongest year-over-year net absorption, while Houston — plagued by space-givebacks among energy focused companies — saw the weakest demand among large U.S. metros. Perhaps due to a more diversified business base, Dallas-Fort Worth and Denver are thriving despite their exposure to the economic repercussions from the falling price of oil.

Nordby pointed out that Dallas and Atlanta are classic big-tenant markets that do well late in the economic cycle, with corporate relocations of companies that require large blocks of space driving their markets.

Link to article: US Office Demand

Sep

30

San Francisco CRE News: New Office Addition to SF Skyline?

Boston Properties pitches 1.1 million-square-foot office addition to S.F. skyline
Source: San Francisco Business Times
By: Cory Weinberg
Dated Posted: September 29, 2015

Real estate giant Boston Properties, already building the tallest tower in San Francisco, has just proposed another huge addition to the skyline in South of Market.

The real estate investment trust filed preliminary plans for a 1.1-million-square-foot office complex that will sprawl on a full block across Fourth and Harrison Streets (across from Whole Foods). It will include a 240-foot-tall, carved-up tower that will likely become a future technology hub.

“In a similar way we think about Salesforce Tower as a vertical campus, we think of this as an urban campus that will be attractive to large tech tenants,” said Michael Tymoff, senior project manager at Boston Properties. “We want the project to reflect the Centraol SoMa neighborhood, and have it not be a downtown office building or suburban office park from an architectural perspective.”

I reported in February that Boston Properties (NYSE: BXP) finalized a purchase option for the 102,000-square-foot lot that now houses a parking garage and a rundown auto repair shop. Boston is one of several big-time developers that have swarmed the Central SoMa area getting rezoned for more height and office use. The rezoning plan should get Board of Supervisors approved next year.

The plan’s preparation has triggered proposals from several major developers, like Kilroy Realty’s Flower Mart office complex, Tishman Speyer’s proposal of condominium towers that would raze the Creamery cafe, and Alexandria Real Estate Equities’ transformation of the decades-old S.F. Tennis Club into an office-fitness mixed-use project.

Boston Properties’ plan is not only one of the largest, but one of the most visually striking – love it, or hate it. A 65-foot podium building with a 90,000-square-foot floor plate will span the entire site. A 130-foot-tall midrise will stack on top on the eastern edge and a 240-foot tower on the western end.

“There aren’t many other buildings in the city that come close to 90,000-square-foot floor plate from a contiguous standpoint. It’ll stand out from the crowd,” Tymoff said.

Architect HOK (Hellmuth, Obata + Kassabaum) looked to “accentuate the ‘elegant and sculpted’ impression of the tower portion both as viewed from the neighborhood and distance along the skyline” with “sculpted buildings,” according to the plans.

“The various carvings into the tower result in a mass that resembles several individual buildings, rather than a single monolithic tower,” according to the plans.

In all, the project would include 907,300 square feet of office space, 9,900 square feet of retail and 53,6000 square feet of “flexible” space that will likely be zoned to open up more space for manufacturers or artists. It will also include about 15,600 square feet of public open space.

Of course, this project will likely shift at least slightly as the Central SoMa plan gets firmed up. The heights mostly conform with what the 2013 draft plan set as guidelines.

The Central SoMa rezoning would funnel an additional $600 million to $800 million into the city’s coffers from developers. The plan could also mandate that developers boost the amount of affordable housing and art and manufacturing space they build. The goal? Harness lucrative office development for more public good. (The trick, of course, is making sure that development is still financially viable even when San Francisco hits an inevitable economic skid.)

The project’s initial plans don’t go far enough in ensuring the neighborhood’s affordability, said SoMa activist John Elberling, who has been working with developers and the Planning Department to try to shape a “community plan.”

“We’ve proposed carving out an affordable housing site, about 15,000-square-feet, on (the site’s) east end. That’s not included,” he said. Elberling added that the building’s entire ground floor should be for affordable manufacturing or arts space, not just 50,000 square feet.

Another twist? The project may sit in a long line of development trying to nab the city’s finite office allocation, which is running out due to the 1986 office cap known as Proposition M. The mayor’s office has pitched some potential solutions to the pipeline clog, but hasn’t followed through on policy changes.

“We’re watching it close,” Tymoff said.

Link to article: Addition to SF Skyline

Sep

24

Bay Area CRE News: Dwindling Office & Industrial Vacancy Spurs Online Space Trading

Source: The Registry
By: Nancy Amdur
Originally Posted: September 14, 2015

As office and industrial space in many markets gets increasingly difficult to find, a real estate Web site is launching a new service this week that allows companies to find and swap space.

The service is geared toward markets with low vacancy, said Hans Hansson, president and founding partner of the site, TradeAddresses.com. Once the Bay Area site is under way, the service will debut in Seattle, New York and Austin. Those markets have a “lack of space, are technology-oriented, and we have boots on the ground there to support the business,” Hansson said.

The site allows companies to “trade their leases to accommodate their actual needs,” when it is difficult to find space on the open market, Hansson said.

Trades can include leaving some or all of a space’s furniture and equipment. There is no guarantee that the lease price will remain the same when swapping, though. “It’s not about trading rent, it’s about securing space,” he said.

TradeAddresses since 1999 has been generating commercial real estate transactions. The company added the swapping service in 2000, but after seven months and about 25 trades, the market crashed and the company ended the service, Hansson said. This is the first time industrial space is being included in the service.

Hansson, a real estate veteran who is president, principal and founding partner of San Francisco real estate company Starboard TCN Worldwide, reinvigorated TradeAddresses with partners Jim Osgood, owner of office space referral and information network OfficeFinder.com, and Carl Bosse, owner of The Associate Realty of the Americas, a national network of high-end residential and commercial agents.

Tech companies are likely candidates for using the service because they are “fluid,” Hansson said, but other types of companies also are potential users.

Bay Area office vacancy is at 9.1 percent and has declined for 21 consecutive quarters, according to a second quarter 2015 report by commercial real estate company DTZ. Space also is being taken quickly. As an example, since early last year, 4.6 million square feet in new development projects in Silicon Valley has been pre-leased, 99.5 percent by technology companies, according to a recent report analyzing the top 30 tech cities in North America by commercial real estate firm CBRE Group, Inc.

Hansson said the company added industrial properties to the service because much existing product is aging, little new industrial space is being built and some sites are being converted to mixed-use or residential developments. Industrial vacancy in the Bay Area was 3.4 percent for the second quarter this year, down from 4.6 percent during the same period in 2014, according to a DTZ report.

TradeAddresses also allows a company “to test the waters” before telling a landlord it wants to sublease, Hansson said. In some leases, a landlord could take back space intended to be sublet before a company finds new space, he said.

Site users can post and seek space for free. They initially do not give a name or address and just enter information about their space such as size, general location and length of the sublease. This is primarily done because most leases have provisions where the landlord, once notified of intent of a sublease, has the option to cancel the remainder of the lease. Both companies pay 4 percent of the remaining lease term to TradeAddresses if a trade is made.

TradeAddresses uses its own brokers—called trade facilitators—who use a proprietary database to access off-market space and work with the companies. Companies also can find space on TradeAdresses then turn the deal over to their own brokers, though TradeAddresses would still retain its fee if the trade is made using properties listed on the site.

Additionally, companies listing a property on TradeAddresses can still market their property in other ways.

Hansson said that in a traditional market, the service likely would not be necessary. “It handles inefficiency in the market today, because there is no space,” he said.

link to article: Dwindling Office & Industrial Vacancies

Sep

10

National CRE News: Is a Commercial Real Estate Bubble Looming?

Despite Investor Concerns of Overheating, Market Indicators Support CRE Pricing
Re-posted: CoStar News
By: Randyl Drummer

As commercial real estate prices have continued to surge, some have become concerned that valuations may be overheating or even reaching bubble levels as a combination of high demand, low interest rates and loosening loan underwriting standards contribute to a record spike in deal activity and price paid per square foot for trophy properties in top U.S. and global markets.

But while investors and analysts agree the surging demand for commercial property should be closely scrutinized for signs of overheating, several market indicators appear to reflect solid justification for the upswing in prices. So while peaking prices are a concern, analysts said it is premature to characterize the recent valuation increases as a ‘bubble’ that will inevitably lead to a market correction.

Rather, they said, the price increases seen over the past 12 months appear to be a direct function of the long period of low interest rates in a low-yield environment, coupled with strengthening fundamentals and rising property-income levels.

“Indicating that we are not in a bubble, we are still seeing a wide pricing gap for taking risk that did not exist in 2006 and 2007, when vacant buildings could fetch premium pricing because investors did not have to wait for leases to expire to get at the embedded rent growth,” said Walter Page, director of U.S. research, office, for CoStar Portfolio Strategy. “Capital is very risk adverse compared to 2007.”

Perhaps most significantly, Page added, previous pricing bubbles have burst only after developers flooded the market with a large supply of new space within a very short time. With the possible exception of the office construction boom in Houston, this is not the case today.

Showing a measure of caution following recent stock market volatility and swings in August and into September, property investors appear to be taking a pause to assess conditions, with previously acquisition-minded investors now saying, “Not so fast.”

In recent meetings with several major investors, Page said the discussions have changed tone and now focus on not rushing in and taking their time to place money. As a result, they expressed expectations that sales volumes may slow somewhat in the second half of 2015, Page said.

Price appreciation has also slowed, both from earlier this year and compared with the early to mid-recovery period from 2010 to 2013, suggesting that pricing is reaching market-clearing levels, added Page.

Using the term ‘bubble’ to describe the current pricing advances gives the false perception that the market is not stable and is ready to burst,” notes Andrew Nelson, chief economist for Colliers International.

“Investors like to buy closer to the bottom, and it certainly seems we’re closer to the top, even if not quite necessarily there,” Nelson said. “At the same time, market fundamentals are strong and getting stronger, and I do believe we have some time left on the clock in terms of continued economic growth.”

While the abundant supply of cash looking to find a home in U.S. properties is helping to propel sales, only about half of U.S. office markets are achieving pricing above the last peak, with top-tier markets like San Francisco, New York and San Jose leading the way. Other major world cities show a similar trend.

CoStar sales data shows record CRE sales volumes in all product types totaling $600 billion over the past four quarters, which is 7% above the 2007 record of $556 billion, and up by 23% from the four-quarter period a year earlier.

Office sales of $148 billion over the past four quarters trail the record $203 billion in 2007, which included $60 billion in sales and re-trading stemming from sale of Equity Office Properties to Blackstone, which some consider to mark the previous cycle’s peak. The current four-quarter sales volume represents a 21% increase from a year earlier, so clearly office sales volumes are strong, Page said.

However, the office value appreciation rate has slowed to 2.4% over the past year, down from the 5% to 8% appreciation rate between 2011 and 2013, Page said. Value increases over the past year have ranged from just over 4% in the San Francisco Bay area to less than 1% in Chicago, Seattle, and Denver.

A marked slowdown in cap rate compression, from 50 to 90 basis points per year during the 2010-2013 period to a 20 bps decline over the past year, also has contributed to the slowing depreciation.

“Because of the expectation of rising interest rates, we are forecasting that the current 5.7% national office cap rate will mark a market bottom, with a rise of 20 basis points forecasted by 2018,” Page said.

Valuations should increase in most markets for several more years, suggests that the growing strength of local economies will be a key factor in improving property returns, Page said.

“Our forecasted annual returns through 2019 range from over 9% for San Francisco and Nashville to 2% for Houston and Washington, D.C.”

Also, rent levels in a large number of metros have not yet risen to the point that justifies new office construction. With the exception of multifamily, levels of new supply remain moderate in most property types, particularly the office market, where construction is almost exactly at its long-term average of roughly 124 million square feet per year, well below the 184 million square feet added at the peak of the last market bubble, Page pointed out.

Moreover, the construction is highly concentrated in about one-third of U.S. markets, led by Houston and New York with 13 million square feet. Seattle, San Jose and San Francisco are also hot spots for office construction.

The remaining two-thirds of markets have roughly half their historical level of new office construction, yet the vacancy rates for these markets are about the same as in 2007.

Globally, property is expensive on a per-pound basis in some top markets, and cap rates are low for the best properties, typically signaling modest returns and expensive pricing, Colliers’ Nelson agrees. With inflation and interest rates still very low, however, spreads between cap rates and long-term Treasury note remain above their long-term averages, making pricing look much more reasonable, he added.

Link to article: Market Indicators Support CRE Pricing

Sep

01

San Francisco CRE News: Technology Companies Continue To Drive Office Rents Up

CompStak: San Francisco Office Rents Continue Their Rise
Re-posted from: The Registry Bay Area Real Estate
By: Robert Carlsen
Date Posted: August 30, 2015

Many brokers, appraisers and developers have experienced San Francisco’s strong first half of the year in commercial real estate, with demand for office space continuing to outpace supply and office rents increasing across all building classes and submarkets.

While Class A and B buildings in San Francisco both had quiet starts to 2015, they recently picked up to close the first half of the year in the black, according to CompStak Exchange, a New York-based commercial real estate database specializing in lease comparables.

CompStak’s second quarter 2015 effective rent report said that Class A effective office rents in San Francisco were up 6.6 percent to $65.29 per square foot over the previous six months and Class B buildings performed even better, with effective rents increasing 12 percent to $59.40 per square foot over the same time period.

And with the tightness of available office space comes the absence of perks. “Landlords who also own property in markets outside of San Francisco know how favorable market conditions really are,” the report said. “Concessions given in San Francisco are far below comparable markets like Los Angeles, Manhattan and Washington, D.C.”

“For example, tenants in Washington, D.C., and Los Angeles County receive, on average, twice as much in free rent and tenant-improvement dollars. The strength of the San Francisco leasing market is evident when viewed in this light.”

According to Blake Toline, a CompStak research analyst, most of the demand driving up prices in San Francisco is coming from technology companies, which has been a trend over the past few quarters. The north and south Financial Districts typically have more corporate tenants, such as law, finance and consulting firms, “but that is starting to change as space around the city becomes harder to find, forcing tech tenants that wouldn’t have normally looked at the central business district to sign space there,” he said.

CompStak said that Class B buildings offer space with more character, unique interiors with exposed brick, operable windows and open floor plans, which makes them more attractive to tech tenants.

Toline provided some recent submarket tenant rent increases over the past six months.

In the lower South of Market area, Class B space is up 3.8 percent to $67 per square foot. Recent lease deals in the region include Elance at 475 Brannan St., which featured an 18,000-square-foot expansion, resulting in an effective rent in the mid-$70s; Hipmunk at 434 Brannan St., which included a 17,000-square-foot short-term renewal and saw effective rents in the high $60s; and HoneyBook at 539 Bryant St., which included a 15,000-square-foot rental in the low $70s.

In the south Financial District, Class A space is up 3.5 percent to $69.80 per square foot. Recent lease deals include WeMo Technologies at 555 Market St., which rented 172,000 square feet in the high $60s; Instacart at 50 Beale St. has 56,000 square feet of lease space in the high $60s; and Intercom at 55 2nd St. has 23,000 square feet of space in the mid-$70s range.

Additionally, in the north Financial District, Class A space is up 5 percent to $65 per square foot. Recent deals include a Sheppard Mullin Richter renewal at 4 Embarcadero, with 72,000 square feet of space in the high $70s; Sentient Technologies at 1 California St., with 17,000 square feet going for the low $70s; and HIG Capital at 1 Sansome, with its 11,000 square feet priced in the low $70s.

Link to article: SF Office Rents Continue Their Rise

Jul

23

National CRE News: US Office Real Estate Market Grows; Businesses Continue To Add Office Jobs

At Midyear, Accelerating New Office Supply Held In Check By Strong Absorption
U.S. Office Market Reaches Supply-Demand ‘Sweet Spot’ as Tenants Trade Up to Higher-Quality Space Despite Rising Rents
Source: CoStar
Reporter: Randyl Drummer
Posted: June 22, 2015

U.S. office market demand growth rebounded in the second quarter of 2015 following slower-than-expected net absorption in the first three months of the year as businesses continued to add office jobs and lease space.

Net absorption roared to 25 million square feet in the second quarter, the second-highest quarter for demand growth since 2006 and more than double the 12 million square feet absorbed during the first quarter.

After years of slow and steady increase in office supply, the level of office space under construction reached 124 million square feet in the second quarter, the highest total since 2009 and slightly eclipsing the 15-year average of 122 million square feet.

Rent growth reached s 4% annual rate in the first half of 2015, while the national office vacancy rate declined 20 basis points to 11.2%. The 27 million square feet of new office space deliveries in the first half of 2015 exceeded the historical first-half average of 21 million square feet, reflecting a relatively healthy office market and broader economy.

“We’re at a supply/demand balance — a really sweet spot in the market cycle for the office market,” said Walter Page, CoStar Group, Inc. director of U.S. research, office, joined by Senior Manager, Market Analytics Aaron Jodka and Managing Director Hans Nordby for CoStar’s State of the U.S. Office Market Midyear 2015 Review and Forecast.

Link to Article: Highest Q2 Office Net Absorption in 7 Years

Jun

30

Bay Area Real Estate News: East Bay Office Rents Surge/Tech Stays In SF

Why Office Rents are Surging in these East Bay Cities
Source: San Francisco Business Times
Reporter: Roland Li
Date Posted: June 30, 2015

Rents are rising in the East Bay office submarket along the northern I-680 highway corridor as local companies expand, despite still-high vacancy rates and limited migration from companies outside the area, according to brokerage Newmark Cornish & Carey.

The submarket, which includes Concord, Walnut Creek and Pleasant Hill, has seen rents increase in some areas by as much as 30 percent, said Tom Fehr, executive vice president and regional manager of Newmark Cornish & Carey. Rents range from $48 per square foot in Class A space in Walnut Creek near the BART station to $24 per square foot in less desirable space in Concord, he said.

The vacancy rate in the submarket of roughly 10 million square feet remains high at 15.3 percent, but it is down from 16.7 percent at the beginning of the year, according to Newmark Cornish & Carey data. Concord has improved to 17.8 percent vacancy, from 20.4 percent at the start of the year.

“What is driving it is organic growth within our market,” said Fehr. “These tenants are not, for the most part, tech companies. The tech companies are staying in San Francisco.”

The northern I-680 submarket is still rebounding from the 2008 recession, when a swath of businesses related to home buying closed, including mortgage bankers, insurers and homebuilders. “We got hit pretty hard. Our recovery’s been much slower,” said Fehr.

Part of the market’s appeal is its proximity to more affordable housing in the East Bay. Workers also typically encounter lighter traffic when driving northeast, in contrast to crossing the Bay Bridge into San Francisco, said Fehr.

Newmark is now fielding more inquiries on space from companies considering a relocation from Oakland or San Francisco. “We’ve been waiting for the spillover to happen probably since the second quarter of 2013,” said Fehr.

Rents aren’t near the $60 per square foot that would justify new construction of office space, and the vacancy rate in the area further discourages any new construction. But if the submarket is able to continue the current momentum to lure more tenants, the area may see its biggest recovery since the recession.

“It’s the first time since 2010 that we’ve had a really dynamic six-month period,” said Fehr.

Link to Article: EAST BAY OFFICE RENTS

Jun

10

San Francisco Commercial Real Estate News: Office Sublease Availability Hits Five-Year High

Don’t Fret: 5 reasons San Francisco companies are dumping office space
Source: San Francisco Business Times
Reporter: Cory Weinberg
Date Posted: June 8, 2015

The sizzling San Francisco office market may have gotten some cold water sprinkled on it, now that the amount of space for sublease has hit a five-year high. Some office market observers have said this could be a signal that the office market may be cooling off, possibly a leading indicator that technology companies are getting too ambitious with their space needs.

But real estate brokerages have sprung to the market’s defense, arguing that the sublease trend is a positive sign. Subleases loosen the market, which makes it healthier, and give startups in need of quick space the opportunity to stay in San Francisco, they say.

“Many landlords are unwilling to sign for less than seven years, so tech startups in particular are finding the sublease market to be a viable option,” a market report by the brokerage JLL said. JLL also pointed out sublease space is being gobbled up at a quick pace – staying on the market for just 94 days on average.

Cushman & Wakefield said there’s “no need to fret.” San Francisco has “nowhere near the amount of vacant sublease space recorded during the dot-com bust just after the turn of the century.”

And now CBRE has crunched numbers that detail why tech firms and non-tech firms are ditching their office space. Tech firms have put 450,000 square feet of space on the market, while non-tech firms have put 745,000 square feet.

The graphic at the bottom (click here for infograph: Graph) breaks down why companies have put up space. We’ll explain what they are:

Space banking

The biggest reason that tech firms have been subleasing is because they’re banking space. That accounts for about 135,000 square feet on the market. Square is one of the tech firms that fits into this trend. “Space banking means they’ve taken another space and would have already occupied it, but they took more than they needed,” said Colin Yasukochi, director of research for CBRE.

Outgrowing space

More than 100,000 square feet is on the market because a tech company has outgrown its space. The biggest example here? Salesforce, which is leasing out space in 1 California and 123 Mission as it grows into its new urban campus next to the future Transbay Transit Center.

Consolidation

About 100,000 square feet is on the market because tech firms have consolidated due to a merger or acquisition. That’s likely why the market has seen some real estate tech firms try to shed some space after Zillow acquired Trulia earlier this year.

Downsizing

About 17 percent of tech company sublease space and 22 percent of non-tech firm space is due to downsizing.
Exiting San Francisco

The bulk of non-tech firms that are trying to sublease space are moving jobs out of San Francisco. That’s why Charles Schwab is looking to shed 350,000 square feet of its space, though it’s maintained it will keep its headquarters present in San Francisco.

Link to article: SF Office Space

May

27

Calco Commercial News: 360 Barneveld – Sold

Calco Commercial Real Estate has sold 360 Barneveld Avenue. 360 Barneveld Avenue consists of 3,775+/- square feet of clear span warehouse with 16′ ceilings and second floor offices. The property includes one (1) large drive-in door and is located in the Bayshore Corridor Area.

If you have any questions about the San Francisco & Peninsula commercial real estate markets or any of our available listings, call our office at 415.970.0000.

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