Cassidy Turley: Strong Workspace Demand to Pause In Early 2013
The San Francisco Bay Area office market gained more than 5.3 million square feet of occupancy in 2012, according to new year-end numbers from commercial real estate company Cassidy Turley.
Since mid-2010, the San Francisco Bay Area office market has seen occupancy grow by more than 16 million square feet, the brokerage reports in an advance copy of the company’s 2013 commercial real estate forecast released to The Registry. That’s enough to fill the TransAmerica Pyramid more than 33 times over, the company calculates.
But the robust activity is likely to take a break this month and next, as the typically slow-moving real estate market regains momentum lost in the last weeks of last year when company leaders paused what they were doing to watch the bitter partisan election and then monitor the equally tense federal fiscal negotiations.
“Though we expect this to improve now that a partial deal is in place, enough real estate decision makers put the brakes on making moves that it will impact activity in January and February,” the Cassidy Turley report concludes. “[A] Q1 slowdown across the board is almost inevitable.”
Still, the broker is tracking 18.1 million square feet of workspace demand in the region as a whole, on par with the demand pipeline it was watching six months ago. It expects office occupancy gains in San Francisco this year to be consistent with those of last year at about 1.6 million square feet. In Silicon Valley, it expects workspace occupancy gains of closer to three million square feet, two-thirds of that on the office side and the remainder research and development space.
San Francisco rents will rise by 9 percent or 10 percent. Silicon Valley rents will climb as much as 15 percent.