Robust Office-Leasing, Rental Sales in San Francisco Bay Area Surge Due to Technology Industry, Says CBRE Group

A new research report from CBRE Group says that the San Francisco Bay Area's growing technology industry, resilient office-leasing activity and increasing rents in 2015 are a total resemblance of the dot-com boom.

However, with concerns revolving about a probable correction in tech valuations, particular Bay Area submarkets like the San Francisco carry more interest to "unicorn" tenants than other, according to World Property Journal.

CBRE examined about 6, 400 San Francisco Bay Area office locations filled by more than 5, 400 firms in its 2016 Techbook research report. The report summarizes the length of the tech industry's control of the market, where 172 million square feet (36 percent of all office stocks) is filled by tech firms. The tech firms are regarded for 60 percent of all office-leasing activity in Bay Area in the first three quarters of 2015.

That strong demand pushed rents near dot-com peaks and put up vacancies tight all over the Bay Area.  The San Francisco's office market has favored the most, as there has been 129 percent increase in the average asking rate in the city since early 2009 to $70 per square foot in 2015's third quarter. Silicon Valley's average rents similarly increased by 76 percent to $51 per square foot in that period and 40 percent in Oakland/East Bay to $33.

Meanwhile, the CBRE's Director of Research and Analysis in the Bay Area, Colin Yasukochi said, "Although there is caution in the air about frothy tech valuations and the continued availability of venture-capital funding, office real estate in the Bay Area remains a strong asset," as reported by REXE News.

"The current economic cycle is regularly compared with the dot-com era because of the technology sector's overwhelming growth profile. However, the Bay Area commercial real estate market has greater support and lasting power this time around and the conditions that led to an extreme spike in 2000 are not expected to surface," Yasukochi added.