According to J.K. Dineen, half a million square feet of unneeded office space in San Francisco has returned to the market over the past few months. And if you’re trying to time the market with respect to a move, the next 18-24 might be a good time to act.

While many landlords still resist lowering asking rates, concessions in free rent and tenant improvements are becoming more and more generous. Three- and four-year deals that landlords would have rejected a year ago were widespread. In fact the average lease term in the second quarter was 49 months, some 10 months shorter than average deals seen in 2006 and 2007, according to Colliers.

And once again, while an oft reported industry metric (in this case average base rent) might suggest one thing about the market, the actual trend in effective rents might suggest another.
Office space floods onto San Francisco market [Business Times]

6 thoughts on “Incentives In San Francisco: They’re Not Just For Condos Anymore”
  1. This is why I still have so little faith in the possibility of the new Transbay Tower as designed. I am not against tall buildings, but is luxury office space the critical need in San Francisco at the moment?

  2. High floor small floor plate rentals are an entirely different world from ordinary city office space. Demand and prices are much higher and stronger for that kind of inventory that caters to the super-uber-mega-quantum-hyper-rich.

  3. The space being dumped back on the market is a function of hiring plans being scaled back or eliminated, and jobs being cut.
    That will start to translate into lower residential rents as well. It isn’t going to help the housing sale market any.
    Silicon Valley isn’t going to solve this problem either: things are slow there as well and hiring is abysmal. Start up activity is pretty low. The job cuts aren’t as large there, as yet, so space isn’t being dumped, but it isn’t being taken up quickly either.
    There isn’t as much generic finance in Silicon Valley so things aren’t shrinking in finance there, and in fact, lots of people are looking for money, so finance is doing pretty well down south, but everyone knows what’s coming so growth has slowed.
    My clients down south have started delaying their payments. As companies run out of money, they are being shut down. But it’s not at the level of the finance firms in SF.

  4. Wait. I thought companies were flocking to San Francisco, because it was such a great place to run a business.

  5. ^^^Because clearly the surrounding “easy to do business places” are doing awesome. Las Vegas is really tearing it up these days…as is Modesto…

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