Source: San Francisco Business Times
Author: Blanca Torres
It’s no secret that tech leasing is driving San Francisco’s office market, but exactly how much?
At the end of last year, San Francisco was home to more than 53,000 tech jobs— a number that has grown significantly in recent years and is expected to keep growing.
What that means for real estate is that of the close to 3 million square feet of office space under construction,100 percent of the tenants pre-leasing space in forthcoming buildings are tech companies according to data crunched by Cushman & Wakefield. So far, those firms snatched up 70.1 percent or about 2.2 million square feet of the space under construction.
That includes buildings such as:
222 Second St., 450,209 square feet: 100 percent leased to LinkedIn.
333 Brannan St., 180,000 square feet: 100 percent leased to Dropbox.
345 Brannan St., 113,000 square feet: 100 percent leased to Dropbox.
350 Mission St., 444,000 square feet: 100 percent leased to Salesforce.
270 Brannan St., 182,000 square feet: 100 percent leased to Splunk.
415 Mission St., 1,412,898 square feet: 50 percent leased to Salesforce.
535 Mission St., 303,780 square feet: 30 percent leased to Trulia.
For existing space, the tech leasing explosion means more landlords are looking for ways to make their buildings “creative” with features like taking out dropped ceilings — a trend that applies to 14 percent of commercial business district space in San Francisco. Landlords have modified about 10.2 million square feet of traditional office space to fit the needs of tech tenants. Rents for modified space have risen an average of 52 percent since the bottom of the market to $64.44 per square foot.
Rents for “prime creative space” went up even faster, by 76.5 percent since the bottom of the market in to average asking rates of $61 per square foot, Cushman & Wakefield said. San Francisco’s office market includes about 51 buildings constituting 6.5 million square feet of creative space defined as “historic and/or brick & timber construction that has undergone a major retrofit.”
Average asking rents in San Francisco’s overall office market shot up about 55 percent to $63 per square foot since the bottom of the market.