The Pressures Driving Adaptive Re-Use and Silicon Valley‚Äôs Strange Reverse Commute
J Thoendell stashed this in Tech
Given Google‚Äôs¬†recent purchase of a building on the Embarcadero¬†and¬†the¬†city‚Äôs move to effectively¬†block Pinterest from relocating its headquarters into a specially-zoned building in the design district,¬†I wanted to point out a few things.
San Francisco is now at record employment levels¬†after adding 60,000 jobs over the last four years. Commercial rents are¬†hovering near¬†their dot-com¬†highs at $64.45¬†a square foot. Even though¬†the city has the most aggressive office construction pipeline¬†in¬†the last¬†thirty years, most of the space coming online in next¬†two¬†years is already¬†pre-leased to tenants like¬†Dropbox,¬†LinkedIn¬†and¬†Salesforce.
The city is about to run into a nearly two-decade old law called Proposition M that caps the amount of office¬†space that can be built in any period.
Under Proposition M, there is an¬†annual allocation of about 875,000 square feet¬†that can go toward large¬†commercial real estate projects in San Francisco. That amount¬†rolls over into following years, so we have about¬†2 million square feet under Proposition M available for allocation. However,¬†there are¬†8 million square feet of projects in pre-approval,¬†so developers are scrambling to get their projects entitled in time.
Net net this means that more businesses will be moving south and east of San Francisco.
San Jose, anyone?
what is the drive to SF? young workers wanting city life? I have seen a few startups move from mid-bay to the city to become more attractive when hiring talent.
About darn time. Having San Francisco be the epicenter of this boom has created much worse traffic than the dot-com boom where companies were in every part of the bay. San Jose is still pretty empty!