SAN FRANCISCO—Technology firms remain on a roll with very healthy net absorption numbers for San Francisco and Silicon Valley—expansion rules for now. That is according to Cushman & Wakefield's Robert Sammons, regional director of research for the Americas. Sammons conducted the REIS San Francisco Roundtable breakfast last week at the Mandarin Oriental Hotel here. But there are a few concerns for the area.
The shrinking FIRE (finance/insurance/real estate) and legal sectors are not just affecting San Francisco but many of the more expensive markets in the US, explained Sammons. “A number of jobs are shifting to lower cost locations while, at the same time, companies are in space efficiency mode (less square footage/employee).” Charles Schwab, he said, is a great example for San Francisco—jobs are shifting to other areas including Austin. On the flip side, he said, are alternative financial services firms such as Lending Club which is growing in San Francisco.
On the tech side, Sammons said, “Many techies would prefer to live in an urban environment which is propelling the more creative divisions to locate in San Francisco proper,” he noted. “Some tech companies are attempting to create more mixed-use campuses in Silicon Valley. Be on the lookout for merger and acquisition activity as employees harder to come by and rather than poach from competing firms, one company will/could purchase another to gain access to the employees.”
Another issue Sammons mentioned, as other sources also recently stressed concern about, was Prop M. “The cap in office development for San Francisco could continue to be an issue for years to come if not adjusted,” he said. “With projects in the pipeline, the City is well over its allocation for some time in the future. Sales prices of land already entitled (recent deals in Mission Bay) have been steep. Will developers and tenants become too frustrated by difficulties of building new product? Will costs to both build and occupy space be too steep?”
- The Mission Bay area, he said, is now on a different path to some extent—away from the biotech base—thanks in part to Uber's decision to build their headquarters in this submarket. Sammons predicted new development to come over the next few years for the area, including multifamily, retail, more UCSF projects, and the Warrior stadium (with additional office).
On the retail front, the Bay Area continues to expand, Sammons added, with “luxury very strong in core areas though fast fashion growing as are some big box retailers, particularly Target which is adding Express locations in the area.”
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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.
