Bay Area Market Forecast: Continued Correction

SAN FRANCISCO-The frenzied office market of 2000 is long-since gone in the Bay Area and stabilization isn’t expected until 2002, according to the latest market forecast by Cushman & Wakefield. The report encompasses San Francisco and the Silicon Valley areas of San Mateo and Santa Clara counties.

Cushman & Wakefield predicts that rents will have dropped anywhere from 13% to 18% in the San Francisco and Silicon Valley markets by the end of 2001. The city’s Financial District will begin experiencing mild rent growth and stabilized vacancy rates in 2002 and 2003, according to the forecast. In the South of Market area, Cushman & Wakefield expect additional rental decreases in 2002 and stabilization in 2003.

Experts continue to refer to the situation as a return to more normal levels of activity after the frenzied pace of the last two years. The Financial District office market here experienced increases in asking rents of 45% in 2000. Non-central business district markets (including the South of Market area) saw more erratic rent growth to an astounding 80% in 2000.