** “Cheap Space may mean Inexpensive Space or a Waste of your time.” Save time: request “Bill’s top picks” on bwilson@tricommercial.com **
Are we going to the dogs? (May, 2012)
“Net Absorption for the 1st quarter of 2012 was positive 867,000 sq.ft. in San Francisco, the highest level since 2006”, claims a major real estate brokerage company. Our research source reports more modest gains but the result was rents increased approximately 12% during this period. In turn this week, the S.F. Chronicle ran an article: “New Boom Is No Echo of ‘99”. Your likely reaction is: (1) What’s actually happening? (2) Will it last? (3) What should we be doing presently?
We have a very strong market out there which is dominated by tech firms (two-thirds of projected demand). The strength seems to be coming from the entire S.F. Peninsula, Silicon Valley through San Francisco. However, the strength hasn’t flowed to the East Bay, beyond a few engineering/ architecture and non-profit firms who are seeking less expensive space!
A lot of discussion has taken place over the likelihood that this is a “bubble”, not unlike 1999-2001, the prelude to the dot.com bust. Part of the evidence is Instagram being bought for $1 Billion by Facebook with only13 employees after 2 years in business. Does that prove the case? Mix in the Dow Jones Average, the optimistic Confidence Index level, the European Debt Crisis and the relative lack of real estate demand in most U.S. cities, to see how impossible it is to concentrate on those factors and to forecast what is going to happen tomorrow, let alone next year.
What you can and should do is several-fold: (1) Examine your present facility for space that could be put to better use. An interior architect could offer some suggestions. (2) If you have a lease expiring in the next eighteen months and the space is the right size, get together with your landlord. Many owners want to avoid the risk of vacant space, lengthy lease discussions and costly tenant improvements. (3) If you have concluded that your present size doesn’t fit you, think about image, floor height, proximity to transit facilities and “building load factor” as potential sources of savings. That’s when you should call me!
The recent news that Tishman-Speyer is going to construct two buildings in SOMA in the next 2 years, without anchor tenants, is alarming. Where are all the legal and financial tenants going to come from to provide a counter-balance to the eventual cycle affecting most start-ups? Before the large social gaming company Zynga bought 650 Townsend, there were rumors Zynga was negotiating with the Landlord for the right to bring 1,500 dogs into the premises. Is that the way of the future?
———————————————————————————————-
About – How can you benefit from this dynamic site?
Case Studies – Lessons learned over a long time from which you could profit.
Additional Resources – When you need a name of a specialist.
Perspective – Graphs, Market commentary etc.
Comp’s – Periodically, some up-to-date leasing rates.
Contact/Bio – SF Space Advocate’s principal, Bill Wilson, has 40 years of varied brokerage experience in the Bay Area, to share with you. In the last 20 years, he has concentrated on representing only tenants and buyers.