Posted by: BayAreaComRE | August 2, 2010

Markets Stabalized in 2nd Quarter, May Stay Flat for Several More

The second quarter marked the San Francisco market bottoming out in the leasing market, and a bubble in the capital markets has driven up sale prices. Other Bay Area markets, as are most markets around the country, are leveling out as well. The market will be flat for several more quarters while the subleases and consolidations by the banks and law firms cancel out the growth in the tech sector. Our readers know our eyes are on the tech sector with start-ups, pre-IPO companies like Twitter, Zynga and Facebook and the large cap behemoths like Oracle, Salesforce and Apple. The tech sector as a whole has 30% of the current demand in San Francisco. The South Financial District has almost 5% less vacancy than North of Market which is attributed to the tech sector demand coming to fruition. Overall vacancy reached 13.1% in the Financial District with rates slightly dropping to $37.94 for Class A, direct space.

The capital markets in San Francisco showed signs of life with several closed transactions. Major markets across the country boasting core assets are experiencing a bubble due to the dearth of properties for sale. In San Francisco, this was highlighted by the sale of 333 Market, with Wells Fargo as the anchor tenant, for over $500 per square foot. Owners of core assets have acted on this trend, and more buildings will be sold in 2010. RREEF recently put Market Center (555-575 Market) on the market in hopes the low supply for core assets in the US will attract domestic and foreign investors.

See the reports from around the country and globe.

We also Scribd the SF MarketBeat.


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