High rents, big deals in 2014
January 3, 2014

Steve Barker of Studley

With demand from technology tenants still strong and vacancy below 10 percent in San Francisco’s hottest submarkets, rents — which have already jumped 60 percent since recession lows — will continue to rise next year. New supply is hitting the market, like Tishman Speyer’s Foundry Square III, and Boston Properties’ 680 Folsom St., and (in early 2015) Kilroy Realty Corp.’s 350 Mission St. But it’s all been preleased by companies such as Salesforce, Macys.com, Riverbed Technology, Neustar and CBS Interactive...

Of course after three years of exuberant growth, the question on everyone’s mind is: When is the bust coming?

Steve Barker, a broker with Studley, said that of all the tech leasing over the last 18 months, about 4 million square feet of it is pure growth space. The problem is that technology companies are having trouble finding the engineers to populate the workbenches.

“What happens when these companies can’t hire?” Barker asked. “What happens to the space? Does that excess space get backfilled by new tech companies that have nowhere else to go? Does it solve itself? Or does it start to flip over into a sublease wave?”

High rents, big deals in 2014

Related Stories

No vacancy: S.F. sublease space falls to 13-year low
Tech Sector Drives Office Market