San Francisco office growth is not sustainable and there will soon come a time when new office construction will slow down, primarily due to Prop M cap limitations according to theSan Francisco Business Times. Every year, San Francisco has 950,000 square feet of office allotment, and during The Great Recession, unused allotments rolled over to allow the tremendous new building going on today. As of May 2014, there was slightly more than 2 million feet available for allocations with more than 8 million feet in pre-approval. With potentially limited office space supply, rents will go up further, and non-tech companies that aren't dependent on the San Francisco tech labor pool may either move some or all their operations eastward to the suburbs or lower-expense areas, such as Texas, or offshore the jobs, or a combination of these. And, it is inevitable that at some point we will have another economic downturn to start the cycle all over again.
Out in the suburbs, we are seeing a trend with certain industries, such as title and insurance companies, downsizing, often taking half of the previous space, as paper goes online, into the clouds or gets processed overseas. Landlords with national tenancies of this type might not get the occupancy stability they have enjoyed during the past 20 years...
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: email@example.com
Follow Jeffrey on Twitter: @jeffreyweil
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