From J.K. Dineen at the San Francisco Business Times:
Downtown San Francisco’s weakest year for commercial real estate since 2001 ended with a whimper, with the central business district losing another 1.3 million square feet of occupied space in the fourth quarter of 2008.
For the year, San Francisco’s “negative absorption” — the sum of both space vacated and empty new square footage coming on line — topped 2 million square feet, according to end of the year reports from CB Richard Ellis.
The deluge of newly available office space drove taking rents — the amount that tenants actually pay for space they agree to occupy — down by almost 25 percent, according to an analysis Colliers International did of 93 leases completed in the fourth quarter. The gap between what office landlords are asking and what tenants are willing to pay is widening, according to James Bennett of GVA Kidder Mathews.
“You have a lot of newcomers to the market who bought buildings at astronomical prices who are now having to stomach the fact that their pro forma rents are not going to materialize,” said Bennett. “It will be interesting to see how those owners respond to the down market.”
We’re still talking commercial, right?
∙ S.F. tenants pour more space onto market [San Francisco Business Times]