Mike Monroe, a senior vice president at Colliers International in San Francisco who represented Hudson Pacific in the GitHub lease, said questions about the supply of technical talent in the Bay Area and whether it can keep pace with demand is something that is being discussed within the real estate industry. “‘Does talent become finite?’ It is being asked a lot. How many engineers can there be in this marketplace?”
He believes it will come down to companies’ cost-benefit analysis tempered by the unpredictable and unquantifiable advantages of rubbing elbows daily with other tech entrepreneurs and investors as you can in San Francisco, he said. “We were talking to a European company, and they said to us, ‘We are doing fine, but we still feel like we need to be in San Francisco because we will learn and we may find opportunity just by being in the market,’” he said. “In my mind, it is supply and demand: If there is still demand for more talent, the talent will arrive. You do hear companies say they are having a hard time hiring, and yet all of these companies continue to come.”
Twelve leases measuring 100,000 square feet or more, including Salesforce and Square, kept the San Francisco office market humming last year, according to CBRE Inc. research released to The Registry. And at 1.3 million square feet, net new occupancy in San Francisco last year was admirable—if decidedly slower than the 2.1 million square feet of net occupancy gains in 2011. The last half of 2012 contributed only 13 percent to occupancy growth, CBRE said.
He expects San Francisco office rents to grow next year at a double-digit rate, but not as fast as the 20 percent and 25 percent rates of the last two years, said Colin Yasukochi, director of research and analysis for CBRE’s Global Research and Consulting unit. As supply dwindles and prices rise, demand will inevitably recede.
Yet, a million square feet of new space were delivered to market in 2012 and another 1.7 million square feet are expected this year, with more than 10 million square feet in some form of execution or proposal behind them.
And as the year closed, Google Inc. was scouring San Francisco streets for as much as 500,000 square feet, engineering company Bechtel was looking for 140,000 square feet, and professional services firm KPMG was looking for 125,000 square feet, according to JLL research.
Software maker Lithium Technologies said Dec. 13 that it would move its headquarters from Emeryville to San Francisco, more than doubling its size to approximately 50,000 square feet. The company considered other Bay Area locations but ultimately settled on San Francisco as the “heart of the social-media conversation,” said Lithium Chief Executive Rob Tarkoff in an email message to The Registry.
San Francisco satisfied the company’s desire to be centrally located to its customers and employees, Tarkoff said, and complements existing offices in Austin, New York, London, Paris, Singapore, Sydney and Zurich. The company is not too worried that its new Bush Street location is north of Market Street, putting it technically outside the trendy South of Market district.
“The space being redeveloped at 225 Bush St. is in a terrific location that meets all of our needs,” Tarkoff wrote. “It’s conveniently located within close proximity to public transport and lots of great amenities. Those were key factors in our choice for Lithium’s headquarters. SoMa is also a great location, but 225 Bush made the most sense for our needs, and we’re really excited about our move. That’s one of the great things about San Francisco: It offers plenty of choices.”
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