San Francisco Commercial Space Rentals Down!
The economic flu unleashed by the housing meltdown may have spread to the local office market, where last quarter San Francisco companies relinquished more space than they leased for the first time in years, according to several reports.One study said nearly an entire Transamerica Pyramid’s worth of tenants gave back space in the first three months of the year, totaling 436,933 square feet. That’s the highest level since the third quarter of 2002, according to Los Angeles brokerage firm CB Richard Ellis Group Inc.
Another study, conducted by the research firm NAI BT Commercial, put what is called the negative net absorption number at a more modest 4,031 square feet, but that still represents the first dip in the company’s research since the fourth quarter of 2003. Meanwhile, rents have flattened and the recently historic clip of office sales skidded to a near halt.
Slowing home values and resetting mortgages caused a surge of defaults last summer that seized up credit markets and pushed the economy to the edge of recession. But the local commercial real estate and employment markets have proved largely immune so far. The San Francisco metropolitan division added 4,700 jobs in March, according to California’s Employment Development Department.
Given that strength, the latest office data, which typically correlate strongly with job trends, could either be a statistical quirk or an early sign of slowing to come, said Stephen Levy, senior economist at Palo Alto’s Center for the Continuing Study of the California Economy.
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