Transwestern’s U.S. Report Confirms Region’s Economic Resilience
SAN FRANCISCO, CA (MAY 21, 2018) – Transwestern’s first quarter 2018 U.S. office report reveals that San Francisco and Silicon Valley lead the nation in positive leasing activity, posting 1.52 million and 1.08 million square feet of absorption, respectively. This is in a period where the overall U.S. office market witnessed positive fundamentals and vacancy remained stable for the sixth consecutive quarter. The Bay Area’s strong performance is due primarily to technology sector expansions.
San Francisco also ranked in the top five for most expensive office rents, which are 65 percent higher than the national average. Silicon Valley and East Bay rents were 40 percent and 20 percent higher than the national average, respectively. Positive leasing velocity and increased investment activity acted as a catalyst to the record trends.
“After the dot.com bust in 2001, a repeat of overinflation in commercial real estate has been brought up periodically,” said Dina Gouveia, Director of Research and Marketing for the Bay Area. “Despite concerns, major Fortune 500 companies that call the Bay Area home continue to expand and reinvest in the area. This reinforces the metro’s ability to reinvent itself after major downturns – and in a remarkably steady manner during this market cycle.”
Eastbay/Oakland office market rent growth outperformed all other secondary office markets nationally, benefitting from the overflowing demand for office space in San Francisco and underscoring affordability concerns in the Bay Area.
Of the 48 markets Transwestern surveyed, San Francisco is the only market that appears in the top 10 across all six performance metrics: absorption (first quarter and trailing four-quarter); vacancy rate; construction; asking rents; and year-over-year rent growth.
“The Bay Area office markets, particularly Silicon Valley and San Francisco, continue to perform well due to the vast web of influence that technology has on most every other major industry. This helps to insulate the Bay Area from local fluctuations and more closely ties the region’s performance to the overall U.S. economy.”
Mahoney explained that the Bay Area remains a strong GDP generator for the nation and thus businesses are willing to pay the high prices for a flagship location.
Download the national office market report at: http://twurls.com/1q18-us-office
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Tenant Advisory, Capital Markets, Asset Services and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Based in Houston, Transwestern has 35 U.S. offices and assists clients through more than 211 offices in 36 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern.