April 8, 2013 Leave a comment
With the first quarter under our belt, our market researchers have been crunching the numbers, moving the abacus, and came up with the following office data. Here’s an excerpt:
The San Francisco office market is still the hottest in the country and one of the hottest around the world. The thriving technology sector continues to power the local real estate economy. The economies of agglomeration that have driven technology growth in Silicon Valley over the past 30 years have expanded into San Francisco. Established tech giants and new startups are looking to base their operations in, or expand into, San Francisco. At the same time, San Francisco remains a draw for companies from across the spectrum of other industries.
EMPLOYMENT. San Francisco’s reliance on the tech and tourism industries has allowed it to weather the Great Recession better than most cities. Moody’s, in their most recent projections through 2018, expects San Francisco to outpace the nation in the recovery as well. San Francisco’s unemployment rate in January was 6.8%, up from 6.5% in December. California’s unemployment rate is unchanged since December at 9.8%. Nationwide the unemployment rate in January was 7.9%.
SALESFORCE. The global enterprise software company Salesforce, which shelved plans to build a new campus in Mission Bay in early 2012, changed its strategy to leasing major office spaces in downtown San Francisco. At the moment, Salesforce occupies over 700,000 square feet, but they have already committed to leases that will push their total over 1.5 million square feet by 2015. 1.5 million square feet would equal almost 3% of the entire financial district market.
NEW OFFICE CONSTRUCTION. As the season changes from winter to spring, San Francisco will see construction begin on its first significant new office developments in years. Tishman Speyer is breaking ground on a 450,000 square foot tower at 222 Second Street. Boston Properties will begin work on a 27-story building at 535 Mission Street and Kilroy Realty will soon begin building a 30-story tower at 350 Mission (already 100% preleased to Salesforce). There was also a ceremonial ground breaking for the Boston Properties/Hines Transbay Tower (1.3 million square feet) on March 28, 2013. These projects will join Tishman’s Foundry Square III (over 286,000 square feet) which is due to be delivered in December 2013.
To read the entire Market Report, click here: office-market-research-san-francisco-2013-1q