The data analyzed by Rosen principals Amanda Howard and Kenneth Rosen in "The Tech Slowdown: Implications for the Bay Area Office Market" shows Web firms and high-risk technology companies accounted for more than 50% of the leases signed in Silicon Valley and San Francisco during the past 18 months.
The big companies are paying $80 per sf in San Francisco and upwards of $65 per sf in Silicon Valley, while many of the smaller companies are moving to the Oakland and Pleasanton areas, where rents can be had for around $40 per sf and $45 per sf, respectively.
In one scenario, the most likely according to Howard, the economy could experience a "deep correction," where the Internet layoffs will continue at their current rate--7.1%--throughout the year. That would cause rents to fall 35% to 40% by 2005, or to $52 per sf in San Francisco and $32 per sf in Silicon Valley, the report finds.
In a grimer scenario, rents would fall to $35 per sf to $40 per sf in San Francisco while in Silicon Valley, they could slide into the mid-teens, according to the study. Howard also tells GlobeSt.com that in a severe scenario, if layoffs were to jump significantly, vacancies could rise to 8% in San Francisco and roughly 6% in Silicon Valley by 2005.
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