The San Francisco office market continues to be on fire. The recent leases of Salesforce.com (716,000 sf), LinkedIn (450,000 sf) and Box (400,000 sf), further diminishes the next two year's supply of available office space. With rental rates in the $60 to 80 per sf range (fully serviced annual), the East Bay is a relative steal with Class A fully serviced rent in the $24 to 40 sf range, but few tech companies (or for that matter, few companies period) want to sacrifice the most valuable asset, their workforce, and thus transbay relocations remain far and few between.
I went back to my 1983 archives, when Concord office space was going for $1.75 per sf and today is $1.75 to 2.00 per sf per month, Walnut Creek Shadelands rents were in the $1.39 to 1.75 per sf range versus today, 30 years later, $1.60 to 2.00 per sf. There is not much difference, although operating expenses have more than doubled, and no adjustment for inflation! Back in 1983, when I set up my first IBM computer, transbay office relocations from San Francisco were brisk, and that was the year I represented AT&T in more than 700,000 sf of office leases in Pleasanton, Calif. Oh, those were the days!
In a recent National Real Estate Investor, there is a chart showing the office net absorption and vacancy for the past two years ... eight straight quarters of positive absorption, but the vacancy rate nationwide is still stuck at almost 17 percent. Maybe things have changed, but when I got my MBA at Cal way back when, a vacancy rate of more than 10 percent was not necessarily a good thing ...
By: Jeffrey Weil
Executive Vice President | Colliers International - Walnut Creek
Jeffrey Weil is an executive vice president for Colliers International Walnut Creek. Mr. Weil has specialized in the sale and leasing of commercial properties for 38 years and has achieved CCIM, SIOR and NACORE’s Master in Commercial Real Estate Services with Honors (MCR.h) designations.
Email Jeffrey: firstname.lastname@example.org
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