Posted by: BayAreaComRE | January 23, 2011

Technology driving real estate, but don’t just take my word for it…

The tech industry is on fire. But I feel like you hear it here quite a bit (okay, ad nauseam), so I put together stories from several other sources that show this trend is real and here to stay. These trends will make 2011 a banner year of growth: NY Times, Wall Street Journal, San Francisco Business Times, SF Gate, and various other blogs. Enjoy! If I missed any, please add in the comments.

You can literally see the digital on the walls!

You can literally see the digital writing on the walls in SoMa and Palo Alto

San Francisco leasing rebounds: Space falls, rents rise | San Francisco Business Times

A buoyant technology industry drove the San Francisco leasing market to a second straight quarter of growth as tenants grabbed about a half million square feet more than they gave up.

Led by much-hyped companies like Zynga and Twitter, San Francisco’s South of Market tenants accounted for half the city’s growth; that tech-heavy neighborhood now has a total vacancy rate of 9.5 percent, including sublease space. In contrast, the sluggish north financial district has a vacancy rate of 16 percent, with 4.8 million square feet of vacancy

Some Good Signs Appear in Commercial Real Estate | New York Times

The commercial property market is an interesting economic indicator, shedding light on the overall strength of a metro economy — which segments are doing the best, and what is valued the most by job-creating businesses. The signals are mixed in the Bay Area, but they do suggest that a rebound is under way and that at least for this economic cycle, the perennial concerns that the region might be losing its edge in high-tech are unfounded.

In the South of Market district in San Francisco, the office rental market has tightened dramatically in the last six months, according to local real estate professionals, as fast-growing social media and Internet software companies snap up “creative” spaces. For all the talk about how technology enables people to work anywhere, many of these companies clearly find value in being within a few blocks of one another.

“There are pockets right now where you can’t get any space,” said Steven Ring, city leader for client solutions at Cushman & Wakefield.

Facebook Considers Moving Its Headquarters | Wall Street Journal

While Wall Street’s eyes are on Facebook Inc.’s capital-raising plans, many employees of the social-networking company are watching another decision that may have a greater day-to-day impact on their lives: a move of its headquarters.

Facebook is in talks to move its headquarters to a 57-acre Silicon Valley campus formerly occupied by Sun Microsystems Inc. several miles from the social-networking company’s Palo Alto headquarters, according to people familiar with the matter.

San Francisco real estate price spike tops boom | 250 Brannan Trading | San Francisco Business Times

Kilroy Realty Trust is in contract to buy 250 Brannan St. for $33 million — a price that suggests that the values of brick and timber office buildings South of Market have now blown past the highs of the last boom.

The $363 per square foot Kilroy has agreed to pay for the 91,000-square-foot building represents a 12 percent increase over what Miami-based developer Don Peebles sold it for in 2007. The buyer in 2007, the Broe Corp. of Colorado, quickly leased two floors to Splunk and Adobe for $40 a square foot. The two leases extend through 2013. The capitalization rate — the ratio between yearly net operating income produced by a property versus its capital cost on the acquisition — was 6.8 percent. The lower the “cap rate,” the higher the cost relative to rents.

Twitter Considers Moving Its Headquarters. To Brisbane, CA? | Techcrunch

The San Francisco Business Times is reportingthat San Francisco-based microblogging darling Twitter is looking into a real estate purchase in Brisbane California, specifically the 200,000 square foot current home of Walmart.com at the Sierra Point Towers.

While reports hold that Twitter is also considering the Centennial Towers in South San Francisco, Brisbane City Manager Clay Holstine confirmedthe Brisbane inquiry to the Mercury News saying, “I don’t know where they are in the process.”

Just a couple months ago we had heard that Twitter was down to two places in their new HQ search, both in SOMA. A move to San Mateo county would come as a surprise, especially considering how proud San Francisco is of being home to the company.

Silicon Valley Heads North – The Office Boom In SF’s SoMa District | Silicon Valley Watcher (Disclaimer: this was my guest post on Tom Foremski’s venerable blog)

As entrepreneur after entrepreneur poured into the Mission Street bar Bruno’s one Thursday night, for a tech startup party, the notion that we are trapped in a perfunctory recovery completely escaped my mind.

The tech scene, driven by a plethora of startups like FlowtownPlancast, and Awe.sm who hosted this meet up, is thriving in San Francisco’s South of Market (SoMa) district.

As San Francisco’s banks and law firms continue to consolidate, fast growing firms such as Zynga are hiring hoards of engineers and salespeople and they need lots of office space. Zynga recently signed the biggest office deal in San Francisco in five years, according to the San Francisco Business Times.

Zynga signing biggest S.F. office lease in years | SFGate

Zynga on Friday was putting the last touches on the biggest new office lease in San Francisco in nearly five years, finalizing a long-anticipated deal that underscores the social-gaming company’s phenomenal growth.

The creator of hit games like FarmVille and Mafia Wars has agreed to lease about 270,000 square feet at the Townsend Center at Townsend and Eighth streets, The Chronicle has learned. That’s about half the size of the Transamerica Pyramid and room enough for more than 2,000 workers, leaving space for expansion at a company that’s about 1,200 strong and counting.

To put the nearly 4-year-old company’s growth into perspective, it took about five years after Mark Zuckerberg started Facebook Inc. in his Harvard University dorm room to cross the 1,000-employee threshold. Google Inc. had 1,628 employees in late 2003, a little more than five years after incorporating and the first point at which it disclosed the size of its workforce.

Salesforce buys Mission Bay site for HQ | San Francisco Business Times

Salesforce.com has paid $278 million to buy 14 acres in San Francisco’s Mission Bay for a 2 million-square-foot headquarters, the company said Monday.

The hugely successful cloud-computing company, which has projected current year revenue to almost double last year’s at nearly $1.6 billion, bought the eight vacant parcels along Third Street from Alexandria Real Estate Equities Inc. (NYSE: ARE).

“We are excited to start work on building a new San Francisco global headquarters,” said Marc Benioff, chairman and CEO of Salesforce.com (NYSE: CRM), who was in Arlington, Texas, to see the San Francisco Giants in the World Series. “Our planned, nearly 2 million square-foot campus over 14 acres at Mission Bay will help us continue to attract and retain talented, world-class employees.”

The Future of Office Spaces | Southaest Venture

It could be the economy, technology, changing work culture, or a combination of the three – whatever it is, discussions of the future of office space are everywhere right now.

Back in November, Southeast Venture principal Paul Plummer was interviewed for the Nashville Business Journal article, “Bigger isn’t always better,” which talked about the growing popularity of efficient office spaces. (You can download a copy of the article off our Web site). Ever since that interview, similar articles have been popping up on my radar.

I decided that it might be useful to jump down the rabbit hole and see just what’s being said about this topic (co-working, shared spacing, hotelling, hot desking, alternative workplaces, etc.).

The list of nine articles below (10 if you count NBJ) tracks my journey. Let me know if I’ve made an glaring omissions, and enjoy the reads.

BayAreaComRE. “Co-Working is Brought to Another Level. RocketSpace Opens Doors to 50,000 Square Feet in SOMA!” Bay Area Commercial Real Estate Blog12 Jan. 2011.

BayAreaComRE. “The New Landscape of Commercial Real Estate – A Discussion of the Future of Office Space.” Bay Area Commercial Real Estate Blog 11 May 2010.

Cook, Bob. “Alternative Workplace Strategy’s New Best Friend: The New Lease Accounting.” Corporate Real Estate Strategy 12 July 2010..

CRE3 Forum. “Tomorrow’s ‘Workplace of the future’ Impact on Today’s CRE Strategy.” Issues/Trends Impacting Corporate Real Estate 1 Sept. 2010

Dolce, Natalie. “Planning for ‘The Office of Tomorrow’.” Globe St. 12 Jan. 2011.

Interview with Robin Weckesser of CresaPartners in San Jose, discussing “Workplace Optimization Strategies.”

Ha, Anthony. “Founders Den classes up San Francisco’s co-working scene.”Venture Beat 11 Jan. 2011.

Hamilton, Charles. “Co-working Options Showed Major Expansion in 2010.”Gigaom 6 Jan. 2011.

Long, Duke. “Is This The Commercial Real Estate Future?” Ramblings of a Commercial Real Estate Broker 13 Jan. 2011.

Mannes, Tanya. “To save cash, business owners opt to share offices.” Sign On San Diego 10 Jan. 2011.


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Responses

  1. Good article, this bodes well for our technology market.


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