SAN FRANCISCO-“Tech energy companies are a bright spot for the Bay Area.” So says Jessica Cassinelli, a senior audit manager and construction team leader from the Sensiba San Filippo real estate and construction practices, who recently chatted with GlobeSt.com on her firm's outlook for the Bay Area.
“From Tesla Motors to SolarCity, there is a lot of activity, leading to more job opportunities and a continued need for expanding manufacturing,” she says. She explains that with the tech bubble expanding again, there is a huge demand for commercial real estate. “Tech companies such as Apple, Facebook and Google are all expanding their infrastructure. For example, Apple is building a new place in Cupertino,” she says. “And Amazon made a deal with the state of California in settlement on an on-line sales tax issue, and is building a super warehouse.”
On the housing side, Cassinelli points out that San Francisco has an intense rental market. “Given the housing shortage, there are a lot of high-rises that are in development but construction has not started yet and will most likely start in 2013.”
Multifamily dwellings, such as apartment complexes, continue to be strong, she says. “A big trend we've seen is real estate and construction firms refurbishing old buildings to increase energy savings, resulting in more profitable operating costs.”
She also points to the Bay Area's new 49ers' stadium, which is expected to be completed by 2014. That, she says, “is keeping a lot of construction companies busy.”
One major obstacle in the Bay Area, according to Cassinelli, is uncertainty. “Prior to the presidential election, many businesses were on hold because they were waiting to see who would be elected and how that would impact their business. Now, businesses are still on hold because they are unsure of the tax frame going forward in light of the 'fiscal cliff' issues.”
Paired with the Health Care Reform Act, businesses with a high labor pool of employees, such as laborers at construction sites, are choosing to only hire new employees until total employees reaches 49 workers, she says. “For companies that hire part-timers, there is now a complicated formula that if you have a certain amount of part-time employees, they will equal a certain amount of full-time employees and you have to provide additional health care opportunities.”
Cassinelli also points out that she has seen tech companies looking out of state, for example to Texas, to build additional facilities. “This occurs not only for tax breaks but due to infrastructure approvals. The Bay Area is backed up when it comes to approving infrastructure expansions. Thus, if there are better incentives and it's faster and cheaper to develop something in a different portion of the country, tech companies are considering that option. Companies keep their headquarters here, but build additional facilities out-of-state.”
Overall though, she says, the Bay Area's commercial real estate and construction markets will continue to get stronger in 2013. “Manufacturing companies, from food processing to biotech, are continuing to grow and positively impact the area. With the European debt crisis, foreign construction companies are looking towards the US. when it comes to real estate construction. And given the Bay Area's strength in technology, it'll continue to expand its infrastructure.”
GlobeSt.com also recently chatted with C&C RiverRock Newmark EVP Anne Hinz on the subject. She echoed some of the same sentiments. Hinz pointed out that “tech users are clearly driving the demand, primarily in San Francisco and the Silicon Valley and, in some cases, their expansion in downtown San Francisco buildings is pushing more traditional office users to Oakland and the Tri-Valley areas of the East Bay, where increasing demand has also lowered vacancy rates in those markets.” To read more of Hinz' thoughts, click here.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
