Source: http://techcrunch.com/2014/07/22/the-pre...

Given Google’s recent purchase of a building on the Embarcadero and the city’s 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.