San Francisco’s leasing and sales market hit rock bottom in December and has already started to rise off the lows, according to a forecast from Colliers International Managing Director Alan Collenette.
The provocative analysis, sure to be controversial in real estate circles . . .
And San Francisco’s leasing market still has a long way to go. Greater downtown San Francisco has some 14 million square feet of available office space — 20 percent of total space. To bring vacancy down to where rents would start to climb again — usually about 10 percent — San Francisco tenants will need to fill 7 million square feet, according to the tenant brokerage Studley. If an average office worker uses 225 square feet (and often it’s less than that), 31,000 new office jobs would have to be created before the city reaches a point where rents stabilize and may start to climb.
Instead, Studley Executive Vice President Steve Barker, who represents three of the largest tenants currently in the market, said most of his clients continue to focus on cutting costs and downsizing rather than growth.
“Unfortunately, it’s not a simple as ‘unemployment is not going up and therefore we’re seeing a recovery,’” Barker said. “It’s a lot more dependant on job creation and measurable positive absorption. Where are those 31,000 office jobs going to come from while most industries are still cutting costs and holding back on hiring? Unfortunately, It’s going to take a long time before anyone should be calling the bottom in the leasing market.”
Link to Article