SAN FRANCISCO, CA -- Several reports highlight high-tech centers like San Francisco with rising rents, and major leases. It's unclear at this point if it points to tends to come for the overall market, or anomaly in this sluggish economic recovery.
From Colliers International, Class-A rental rates across all markets averaged $48.87 per square foot, up from $44.56 in fourth-quarter 2011,in the first-quarter office report for San Francisco; class-B rates rose from $38.18 to $40.29 during the same time period. Class-A financial-district rental rates rose from $43.56 to $49.65 during that time, while class-B rates in this submarket rose slightly from $36.03 to $36.85. Demand and rent growth are being driven largely by technology growth—specifically, social media, search engine and cloud computing companies such as Twitter, Zynga, Salesforce, Yelp, Google and LinkedIn.
Jones Lang LaSalle estimates that high tech accounts for nearly one-third of recent office-market absorption nationwide, and the top five markets—Boston, New York, Silicon Valley, San Francisco and Seattle—recorded annual rent growth across key tech-oriented submarkets of between 16.8% and 57.9% in the first quarter.
A shakeout in the social media is likely. Gaming mobile apps are as fickle as their big brother, desktop based gaming. Still unlike the dot.com bust in the last decade, these companies begin with revenue generating models. But ask landlords from that era how quickly a monster tenant can deliver lease termination papers and vacage the premises. Watching...from San Francisco..