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Tech Crash Continues to Take Toll on SF Office Market

SAN FRANCISCO-Cushman & Wakefield has released its preliminary second-quarter 2002 report, which reveals that the San Francisco office market is still suffering from the technology crash.

By Michelle Savage | Updated on June 25, 2002

SAN FRANCISCO-According to Cushman & Wakefield’s preliminary second-quarter 2002 report, San Francisco office rentals have sunk to record-breaking lows, with the city failing to recover from the dot-com crash.

“We’ll continue to see the market in a slow downward trend for the next six to 12 months, because there is a glut of space and little demand,” says Mark McGranahan, a senior director with C&W. “In the last three to four years there was approximately five million new square feet in construction, and a lot of demand for that was all tech demand, or it was service sector demand that has dried up,” he adds.

As a result, the commercial real estate market crashed, with downtown office rental rates dropping 57%. At the end of 2000 landlords were demanding an average of $80 psf. Today, C&W found that the average rate is $34 psf. Rental rates have not been this low since 1996, when rents averaged $29 psf.

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