Posted on March 22nd, 2015 ยท Posted in Office Market

2014 saw asking rents skyrocket while vacancy rates continued to push lower and lower leaving many businesses to wonder what they’re strategy will be when it comes to leasing new space or renewing at an existing location.

Net absorption reached 2 million square feet as a result of 17 deals over 100,000 square feet that leased a combined 3.6 million square feet with 15 of those coming from technology firms. This growth in leasing activity pushed vacancy rates to 6.6% and San Francisco’s office metrics are now surpassing those of Manhattan.

The red hot market saw $5.9 billion in investment sales as large corporations and REITs moved to buy up product that could appreciate 20% or more over the next few years. The amount of investment sales was triple that of 2013 and came close to breaking 2012’s record of $6 billion in sales.

Asking rates spiked 14.2% to $63.24 as tech firms continued to aggressively lease space throughout the city while new construction projects won’t be adding a significant amount of supply for the next few years. Looking at 2015 we’re likely to see another double digit increase that could price out a lot companies that signed deals at the $45-$50 level and will be looking at renewals in the $65-70 range. This will be especially true for smaller office users who will have to seriously look at moving south or east of the city putting additional pressure on their workforce.

Their are still below market opportunities available but these are often leased quickly so contact our team today with your office requirements and we’ll be happy to set up searches, show current availabilities and immediately notify you when opportunities come on the market.

Photo credit: Don McCullough