Category: San Francisco Tech Real Estate (3)

Source: Bloomberg
By: Rani Molla, Shira Ovide
Date Posted: April 18, 2016

The Bay Area has long been the center of the technology world, and it remains the undisputed king of startups. But lower wattage tech hubs are popping up as hospitable homes for the next Facebook or Google.

The bloom of more silicon cities has spread tech jobs into some unlikely places such as Florida and Utah, but it has also brought some of the attendant annoyances familiar to Northern California, including rising costs for office space.

Bloomberg Map

U.S. venture capital firms — the financiers seeking to find and fund the next Google or Facebook — wrote $12.1 billion worth of checks for U.S. startups in the first quarter of 2016, according to a PwC and NVCA MoneyTree report based on data from Thomson Reuters. About 40 percent of that sum went to young companies in the Bay Area, a share of startup financing that has increased from a decade ago.

But some of the biggest deals in the first quarter of 2016 went to companies outside of the Bay Area. Magic Leap — a Dania, Fla., startup that is working on technology to mix virtual images with the real world — collected $794 million from investors. Domo, a business software startup based in American Fork, Utah, added $131 million to its coffers so far this year, and it is laying the groundwork for an initial public offering.

The spread of startup money outside the Bay Area has helped those cities take advantage of growth in high-tech jobs, which has far outpaced that of office jobs overall.

And while Silicon Valley continues to lead the pack, Phoenix, Austin, Nashville, Indianapolis, Charlotte and Salt Lake City all made the top 10 list for growth in high-tech jobs, according to the latest available citywide data from real estate services firm CBRE, which analyzed U.S. Bureau of Labor Statistics data.

Labor Stat Graph

The trend of startup money and jobs flowing beyond the Bay Area is no accident. Startup founders say pay for employees in other tech hubs such as Seattle, Salt Lake City and Birmingham, Ala., tends to be lower than it is in the Bay Area. Startup workers outside Silicon Valley also tend to job-hop less often and demand fewer perks like free burritos and hammocks in the office.

Investors say they like those non-Bay Area startups, too, because valuations tend to be a bit lower, which means each dollar of investment buys them a larger piece of a startup. For example, PayPal co-founder and venture capitalist Peter Thiel recently mentioned he was hunting for investments outside of Silicon Valley.

Becoming a tech hub has downsides, too. The emergence of spots like Silicon Slopes (Salt Lake City), Silicon Beach (in the Los Angeles area) and Silicon Mountain (Denver) has also coincided with big jumps in office rental costs in some spots.

Link to article: Tech Moving from Silicon Valley

Source: San Francisco Business Times
By: Roland Li
Date Posted: March 3, 2016

Quantcast, a website analytics company, has leased three floors totaling about 95,000 square feet at 795 Folsom St., the former Twitter Inc. headquarters in South of Market, said two sources familiar with the property.


San Francisco-based Quantcast is replacing AT&T Inc. (NYSE: T), which vacated the space at the end of January, said a source. The swiftness of the deal is another sign that large chunks of office space are still being filled rapidly throughout the city, despite recent job cutbacks at prominent startups such as Zenefits and Surveymonkey. The asking rent in the building was in the mid-$70s, according to marketing materials.

Quantcast, founded in 2006, is also more established than many of the venture capital-fueled tech tenants that are growing rapidly. Quantcast was the 33rd-largest tech employer in the city with 385 employees as of January, up slightly from its 368 local employees in January 2015, according to Business Times research.

A Quantcast spokeswoman confirmed the lease and said the company will be relocating from its current headquarters about three blocks away at 201 Third St.

Steve Anderson and Bryan Ivie of JLL represented landlord ASB Real Estate Investments and asset manager Union Property Capital in the lease. JLL also represented the tenant. JLL declined to comment.

The six-story, 187,000-square-foot building at 795 Folsom St. is close to Yuerba Buena and Moscone Center. It was built in 1976 and renovated in 1999.

Twitter (NYSE: TWTR) moved into 795 Folsom St. in 2009, and then relocated to its current headquarters at 1355 Market St. in 2012. Current tenants at 795 Folsom St. include the real estate space provider Regus (LON: RGU) and gaming company Kabam Inc.

ASB bought 795 Folsom St. from Cornerstone Real Estate investors for $110 million in 2013.

Link to article: SF Tech Company Leases Three Floors at former Twitter HQ

Source: San Francisco Chronicle
By: Kathleen Pender
Date Posted: December 3, 2015

Fierce demand for tech workers and office space in the Bay Area continues to push wages and rents into the stratosphere.

In San Francisco, the average annual wage for tech company workers rose to $176,275 in 2014, up 12.8 percent from the year before. That was the biggest increase among 36 markets nationwide, according to JLL, a commercial real estate services firm.

The wage might sound high, because it includes salary, bonuses, income from stock options, severance pay, cash value of meals, tips and certain other types of compensation.


San Mateo County had the nation’s highest average tech company wage last year, $240,663. That was actually down 23 percent from 2013, when the county’s average was probably distorted by a $3.3 billion stock option gain reaped by Facebook CEO Mark Zuckerberg. It was also skewed in 2012, when the Menlo Park company went public and Zuckerberg made a $2.1 billion profit exercising options, said JLL Vice President Amber Schiada.

“It’s crazy how just one company can move the needle, but San Mateo’s tech-job base is small” compared with neighboring counties, Schiada said. Last year, with no Zuckerberg options in the picture, San Mateo County’s average tech wage looked a little more like its neighbors’.

In Santa Clara County, the average tech company wage was $211,874, up 8.4 percent from 2013. In Alameda and Contra Costa counties, it rose to $121,747, up 6 percent.

These numbers, derived from federal and state labor market data, reflect average wages in eight industries selected by JLL: computer/electronic product manufacturing, electrical equipment manufacturing, e-retailers, online auctions, computer systems design, data processing and hosting, software publishers, and other information services.

By comparison, the average wage in all industries nationwide last year was $51,364 in 2014, up 3.1 percent, according to the U.S. Bureau of Labor Statistics.

The growing disparity between tech workers and everyone else is putting pressure on cities to raise their minimum wage and even helped win a pay raise for tech bus drivers, said Steven Levy, director of the Center for Continuing Study of the California Economy. But these gains at the bottom of the income scale “are swamped by increases in housing prices, mostly rent.”

Office rents soar: The same bidding wars driving up tech wages and housing are also driving up the cost of office space. The average asking rent in the third quarter was $66.80 per square foot per year in San Francisco, up 12.6 percent over the previous 12 months. It was $53.49 in San Mateo County, up 16.4 percent, and $41.68 in Santa Clara County, up 3 percent. That compares with a U.S. average of $30.59 per square foot.

Tech companies hoping to avoid the Bay Area’s high cost of labor, housing and office space are considering locating in secondary and tertiary tech hubs. In a report, JLL analyzed 37 markets based on their costs (wages, office space and housing) and startup opportunity (measured by employment and wage growth, Millennial workforce and education levels, patent activity, access to venture capital and proximity to a tech cluster or giant).

Based on these factors, San Francisco offered the highest startup opportunity but also the highest cost. Markets that offered high opportunity and more reasonable costs included Austin, Seattle-Bellevue, Denver, Chicago and Washington. Places with high startup opportunity and low costs include Las Vegas, Orlando and Nashville.

“If you are a young tech company, especially one that is sensitive to cost,” those markets look more attractive, Schiada said.

The report pointed out that only 59 percent of unicorns — private companies valued at $1 billion or more — are now based in San Francisco and Silicon Valley, down from 76 percent in 2014.

That said, Silicon Valley “is still the center of the tech universe” and will be for the foreseeable future, Schiada said.

Santa Clara County was by far the largest center of leasing activity over the past year, measured by leases of 20,000 square feet or greater signed by tech companies. Such leases accounted for 5.4 million square feet, more than twice as much as in the No. 2 market for tech leasing, San Francisco.

Which companies leased the most new space? In Santa Clara County it was Google, which signed up for 2.1 million square feet in Mountain View. In San Francisco it was Uber, which took on 310,000 additional square feet. In San Mateo County it was Survey Monkey, which leased 210,000 square feet at Bay Meadows. In the East Bay, it was Workday, which rented 151,000 square feet in Pleasanton, Schiada said.

These numbers exclude companies that purchased major new office space, including Uber in Oakland and in San Francisco.

Rents are soaring …

Average asking rents for office space in the nation’s 10 most expensive tech submarkets:

Downtown Palo Alto: $98.68

Downtown Mountain View: $87.53

Mission Bay/China Basin, S.F.: $81.50

Hudson Square, N.Y.: $81.50

Soho, N.Y.: $79.80

Gramercy Park, N.Y.: $76.58

Menlo Park**: $73.44

South Financial District, S.F.: $68.61

North Financial District, S.F.: $68.53

East Cambridge, Boston: $67.21

*Per square foot, per year for full-service leases in the third quarter of 2015

**Excludes Sand Hill Road

Source: JLL

… And so are wages

Top 10 markets for tech company wages


Annual wage, 2014*; Change from 2013

San Mateo County: $240,663; -23.5%

Santa Clara County: $211,874; 8.4%

San Francisco: $176,275; 12.8%

Seattle-Bellevue; $154,390; 7.4%

New York City-Brooklyn: $135,339; 7.8%

Boston: $131,278; 3.9%

Alameda & Contra Costa counties: $121,747; 6.0%

Northern Virginia: $119,901; 2.6%

Portland: $112,185; 7.8%

Suburban Maryland: $109,027: 5.4%

*Includes salary, bonuses, income from stock options, severance pay, cash value of meals, tips and certain other types of compensation.

Sources: JLL, Bureau of Labor Statistics, California Employment Development Department

Link to Article: Wages, Rents Up