As a plugged-in reader commented and we’ve now co-opted, San Francisco’s commercial real estate market continues its decline. A few stats from Bloomberg:
San Francisco office rents dropped 24 percent in the first quarter from a year earlier, the biggest decline since the dot-com crash in 2001.
The office vacancy rate rose to 13.2 percent from 12.6 percent in the previous quarter and up from 10.2 percent a year earlier.
Almost half of the largest companies in the San Francisco Bay Area plan to cut staff in the next six months.
Not good. Unless, of course, you’re a renter looking to expand or renegotiate a lease.
∙ San Francisco Office Rents Fall Most Since 2001 [Bloomberg]
∙ Doesn’t Everybody Want To Work Here? (Class A Rents Plunge) [SocketSite]
Somebody tell the folks who’ve been preparing the floor above my workplace office that there aren’t supposed to be new tenants moving in. I’ve been hearing bowling alley type sounds while trying to work for the past month. I jest, of course, I’m happy to see folks moving into the building for once in a long time.
This is why I had made bets with some of my friends that there will be no Transbay Tower, but reading a recent NYTimes story about Chicago made me reconsider my doom and gloom.
Construction Unions in Chicago have decided it might be cheaper to “invest” in the 150 story Chicago Spire since providing work for unemployed construction union workers and owning a portion of the tower project might be better than paying out long term health care and unemployement benefits to their members. Who knows?
Office rents are $40 psf full service in sf right now.
They need to get close to $100 psf for something like the transit tower to get financed.
CBD office properties will see a greater decrease in value during the cycle coming up than A-location residential hi rises, such as millenium and infinity.
The unemployment trends seem to be getting worse at an accelerating pace.
On the chart, U-6 is considered closer to real unemployment, while U-3 is the official number. Both are accelerating.
http://4.bp.blogspot.com/_nSTO-vZpSgc/SdhA-TS4LGI/AAAAAAAAF3U/gprLx9JqCBI/s1600-h/unemployment-p4.png
this is far from news (this story is everywhere)
but the drumbeat is getting louder and louder…
http://www.calculatedriskblog.com/2009/04/vacancies-vacancies-vacancies-and.html
San Francisco citywide office vacancy rate is at least 12.2 percent this quarter and a rise of vacancy is expected as we move to 2nd quarter. owners will struggle to pay off their debt with tenants vacating office space.
Does anyone know if the banks or the credit market are start to get back on track yet? The stock market is been up with the positive outlook from banks. This economy seems to be bipolar lately.