Some industry observers might have thought that an office-tech bubble in the San Francisco Bay Area would start to happen, but if the first quarter was any evidence that’s not about to take place soon.
This is, in part, the strong unemployment rate, which sits at 3.8 percent, compared to 5.7 percent nationwide, as well as firms such as Uber signing leases for major chunks of office space, including the car services’s 172,000 square feet at 555 Market St., points out JLL.
Tenants are also grabbing extra space they currently don’t need forecasting future growth, driving the sublease market.
JLL had first quarter vacancy rates at 9.9 percent, a bit higher than the 9.8 percent for all of 2015, however, rents rose 13.9 percent on a year over year quarterly basis, hitting $65.16 per square foot.
Meanwhile, Colliers International says the market is performing just as well as it did around 2000, and had a vacancy rate of just below 6.9 percent during the quarter for the San Francisco Peninsula.
Colliers also had another interesting piece of information: Office rents in the Palo Alto have shot up 37 percent in only the last two years. And though that particular submarket is tight, big leases are getting signed, such as a 105,000 square feet by Jazz Pharmaceuticals in a build-to-suit facility in the Stanford Research Park.