San Francisco’s office market saw leasing activity in the final quarter of 2010 fall to 1.3 msf, just two-thirds of the market’s historic quarterly average of 1.9 msf, according to the fourth quarter 2010 San Francisco Studley Report. On a trailing four-quarter basis (the sum of all leasing activity over the last four quarters), leasing volume fell to 6.1 msf, approximately 22 percent below the market’s historical average.
“The lack of large lease signings in the fourth quarter underscored the market’s vulnerability as major transactions propped up the market while the majority of tenants were downsizing,” said Steve Barker, Studley executive vice president and branch manager of the firm’s San Francisco office. “Eight deals equaling 100k sf or more were executed during the first three quarters of the year, while Google’s 63k sf expansion was the largest lease signed in the final quarter of 2010.”
... “Cost-cutting relocations like these will lower the overall demand for San Francisco’s office space in 2011 and free up additional options for tenants,” noted Barker. “Although major lease deals completed by red-hot tech companies including Twitter, Zynga, and Salesforce.com dominated the headlines in 2010, the market’s traditional tenant base of financial service providers and law firms, as well as government agencies, continued to contract heading into 2011.”
... “Locally, only 1,100 office-using jobs were regained in the second half of 2010. An additional 33,000 must be recovered in order to reach pre-recession employment levels,” explained Barker.
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