Office Space News
San Francisco Office Space Still Suffering
Published August 23rd, 2010 by Jennifer LeClaire
San Francisco’s office space market may be bullish, but the numbers don’t offer much reason for celebration. San Francisco’s office space fundamentals are still week, according to the San Francisco Studley Report.
Nearly 16 million square feet of office space is currently available for lease in San Francisco, and tenant demand has not turned a corner, despite marked improvement in other segments of the economy. In fact, Studley reports leasing activity declined in the second quarter, down approximately 20 percent as compared to the first quarter, to 1.4 million square feet. Class A asking rent standing at $33 per square foot.
“The labor market, which is the forerunner to tenant demand, was hit particularly hard by the recession and is lagging behind other indicators of a broad economic recovery,” says Steve Barker, Studley executive vice president and San Francisco office branch manager. “The titans of San Francisco’s tenant base: legal, banking, and insurance companies are simply not growing in 2010.”
Barker did offer a glimmer of hope for San Francisco’s office market, though. He says both
emerging and established technology companies are very active in the market, equaling 1.5 million square feet of requirements in total. These companies, he says, have focused their attention South of Market where there’s an inventory, although limited, of creative space.
How does all this bode for the executive office suites industry in San Francisco? Serviced office space is competing neck and neck with traditional office space there. But with reputable serviced office brands making plenty of noise in the local market, the turnkey approach and shorter leases serviced office space offers could be attractive to tentative small businesses. Let’s take a look at the serviced office scene in San Francisco:
- Premier Business Centers
- Sandbox Suites
- Regus/HQ
- Readisuite
- Summum Executive Suites
- 333 Bush Street
- Pacific Corporate Suites
- Regent Business Centers
- The Executive Offices
- Atrium Executive Suites
- SFO Business Centers
- Daily City Business Center
The list of executive office suites in San Francisco just goes on and on and on. Now is the time for business centers in San Francisco to amp up the marketing, especially South of Market where the competition is more fierce. With more optimism in the market, companies may be willing to take on longer lease terms and leave serviced office space for the start-ups in the quarters ahead. Differentiating executive office suites by clearly communicating the value proposition is vital as the San Francisco market recovers.
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About the Author
Bill Brookshire August 23rd, 2010 at 11:14 am
Looks like the landlords are more optimistic than the tenants in San Francisco’s office market. But it may not take long for them to catch up. I agree with you. Serviced office space that was attractive in a down economy may lose some of its allure as folks start to see the market hit bottom and look to ink longer-term deals before the office rental rates in San Francisco and the Bay areas climb north again.
Elizabeth Sanchez August 23rd, 2010 at 12:01 pm
There are not only tons of executive office suites projects in San Francisco. As you already know, there are also quite a few coworking facilities. So there is all sorts of competition in that office space market. That’s a good place for a tenant to be because with so much — and so many different kinds — of office space in San Francisco the market should remain pretty competitive rates-wise.