CFAH

From J.K. Dineen at the San Francisco Business Times with respect to office space:

San Francisco tenants unloaded another 250,000 square feet of unwanted office space onto the market in January, as employers slashed workers and pushed to generate sorely needed cash by subleasing floors in Class A downtown towers.

Companies adding to the avalanche of available sublease space include Charles Schwab, which said Jan. 30 that it would cut 500 to 600 jobs in the first quarter. Schwab is seeking a subtenant for 80,000 square feet at the 1 Montgomery Tower. Also in that building, Thomas Weisel Partners Group is looking to sublease 20,000 square feet on the 35th floor, billed as a “high-end build out with panoramic views.” Other chunks of sublease space coming available include 15,639 square feet of brand-new space at the just completed 555 Mission St. being subleased for $48 a square foot by law firm DLA Piper, and the entire 22nd floor of 345 California St., former UBS space that Cushman & Wakefield is looking to lease for five years at a rock-bottom $27 a square foot.

And with respect to San Francisco unemployment:

The number of unemployed San Francisco residents grew by 10,300 in the fourth quarter of 2008 to 29,500, according to Ted Egan, chief economist for the City of San Francisco. In spite of the fourth-quarter increase, Egan pointed out that the 10,000 jobs eliminated during the final three months of 2008 came in dribs and drabs rather than the sort of en masse layoffs announced in recent days by Charles Schwab and Macy’s, which announced 1,400 San Francisco layoffs on Feb. 1. A loss of 2 million square feet of occupied space equals about 10,000 workers.

“Now we are starting to see major layoffs from major employers,” said Egan. “This is the sign of the recession coming to San Francisco.”

Quarter-million square feet added to S.F. sublease glut [Business Times]
Jones Lang LaSalle Office Outlook For San Francisco And The Valley [SocketSite]
A Virtual Tour Of 555 Mission Street (And Downtown San Francisco) [SocketSite]

Comments from Plugged-In Readers

  1. Posted by Louis

    The rent figures JK quotes are almost unbelievably bad. The full floor at 555 Mission especially. The trendline is so vertical on office rents it will continue for at least a couple of quarters. until it flattens around $35 psf (??) for hi rise A space in Finl District.
    The tail of that trend is all the office bldg purchases based on those same rents going to $75 psf, and only hit $50, with some re-tenantling (and not too much) at those levels.
    A year from now, when large loans made in 2005, 2006 run out it will be very difficult to recapitalize those deals.
    The reduction in value of office bldg values will be larger than the decrease in residential values.

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