Market Insight Editorial & Advice to Tenants: 4Q2012
In this Issue:
How many alternative spaces are available to you to suit your requirement? Isn’t this part of the core litmus test of how soft or tight the market really is?
See our chart below where we track the changes for all size ranges of tenants in these reports every quarter. If you want real-time data, please call me.
If you’re in search of intelligent life in the brokerage community, please enjoy this Editorial with my compliments. For more historical perspective, feel free to peruse the last 15 years of my pearls of wisdom.
Dan Mihalovich
President, Mihalovich Partners
Founder, The Space Place®
49.6 Million Square Feet STILL On the Market
The Bay Area supply of space declined 4.2% from 51.7 million square feet in Q3 to 49.6 million in Q4.
Currently available office space has remained on the market for 2 years or longer! Recall that our markets crashed under the weight of less supply during the Dot Bomb when only 42 million square feet were available for lease.
Q4, 2012 in the San Francisco Bay Area wrapped up as follows:
| square feet available (millions) | average time on market (months) | |
|---|---|---|
| San Francisco | 13.6 | 26 |
| San Mateo County | 7.0 | 22.7 |
| Santa Clara County | 14.5 | 27.8 |
| Contra Costa & Alameda Counties |
15.6 | 28.0 |
Amount of New Space Added, Past 45 Days
For all you market bulls out there, keep in mind that the activity is dynamic. New space is coming online all the time, both direct and sublease.
Here’s what hit the market in the last 45 days of Q4:
| square feet | |
|---|---|
| San Francisco | 1,390,000 |
| San Mateo County | 270,000 |
| Santa Clara County | 1,145,000 |
| Contra Costa & Alameda Counties | 775,000 |
Top Five Leasing Transactions by County for 4Q 2012
San Francisco
| 1 | Salesforce.com 350 Mission St |
444,271 sq. ft. |
| 2 | Square, Inc. 1455 Market St |
250,000 sq. ft. |
| 3 | City and County of San Francisco 1155 Market St |
110,717 sq. ft. |
| 4 | Meraki, Inc. 500 Terry Francois Blvd |
109,508 sq. ft. |
| 5 | Salesforce.com 50 Fremont |
100,000 sq. ft. |
San Mateo County
| 1 | OpenWave 1600 Seaport Blvd |
36,523 sq. ft. |
| 2 | CafePress, Inc. 1850 Gateway Dr |
21,441 sq. ft. |
| 3 | Kaiser 2001 Junipero Serra |
21,374 sq. ft. |
| 4 | QlikTech 77 Airport Blvd |
18,061 sq. ft. |
| 5 | Golub Group 1850 Gateway Dr. |
14,088 sq. ft. |
Santa Clara County
| 1 | CoreSite Datacenter 2972 Stender Way |
50,000 sq. ft. |
| 2 | AppSense, Inc. 100 Mathilda Ave. |
22,465 sq. ft. |
| 3 | Malwarebytes 10 Amalden Blvd |
21,924 sq. ft. |
| 4 | Nimble Storage 2841 Junction Ave |
20,047 sq. ft. |
| 5 | Panzura 695 Campbell Technology Pky |
16,669 sq. ft. |
Contra Costa &
Alameda Counties
| 1 | Clorox, Co. 1221 Broadway |
275,501 sq. ft. |
| 2 | PG&E 6111 Bollinger Canyon Rd |
106,673 sq. ft. |
| 3 | - 2999 Oak Rd |
40,500 sq. ft. |
| 4 | RH USA 455 N Canyons Pky |
28,000 sq. ft. |
| 5 | Dohmen Safety 2200 Powell |
19,087 sq. ft. |
Vacancy Rates: Are Your Options Fading?
Tenants should watch carefully to detect how and to what extent your field of options changes. Which size blocks of space are getting leased?
Discussing vacancy and absorption rates can be confusing to some. What language makes sense to tenants? Tenants ask, “Tell me about my specific options. How many choices do I have?”
Are your options fading as a result of leasing activity? Review the chart, below, and let’s discuss.
| Blocks of Space Available (sq.ft.) | San Francisco County | San Mateo County | Santa Clara County | East Bay Counties | Total Change in # of Blocks Available | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q4’12 | Q3’12 | Q4’12 | Q3’12 | Q4’12 | Q3’12 | Q4’12 | Q3’12 | Q4’12 | Q3’12 | |
| 5,000–9,999 | 305 | 311 | 110 | 115 | 282 | 257 | 360 | 386 | 1057 | 1069 |
| ▼ 2% | ▼ 4% | ▲ 9% | ▼ 6% | ▼ 1% | ||||||
| 10,000–19,999 | 199 | 201 | 62 | 61 | 126 | 135 | 160 | 166 | 547 | 563 |
| ▼ 1% | ▲ 1% | ▼ 6% | ▼ 3% | ▼ 3% | ||||||
| 20,000–29,999 | 53 | 60 | 26 | 27 | 37 | 44 | 62 | 72 | 178 | 203 |
| ▼ 11% | ▼ 3% | ▼ 15% | ▼ 14% | ▼ 12% | ||||||
| 30,000–39,999 | 26 | 27 | 13 | 19 | 15 | 17 | 25 | 25 | 79 | 88 |
| ▼ 3% | ▼ 31% | ▼ 11% | 0 | ▼ 10% | ||||||
| 40,000–49,999 | 15 | 13 | 5 | 5 | 11 | 10 | 15 | 16 | 46 | 44 |
| ▲ 15% | 0 | ▲ 10% | ▼ 6% | ▲ 4% | ||||||
| 50,000+ | 50 | 48 | 60 | 56 | 141 | 134 | 58 | 59 | 309 | 297 |
| ▲ 4% | ▲ 7% | ▲ 5% | ▼ 1% | ▲ 4% | ||||||
You can request a free space survey, containing all direct and sublease space meeting your specific requirements. We can also provide building photographs, floor plans, leasing histories and more. You’ll receive your survey within one business day. To discuss your space needs in person, call 415-434-2820 or email dan@TheSpacePlace.net.
Who Has the Most Incentive to Drive Up Rental Rates In San Francisco?
When we approach a prospective new tenant client, we tell them that we NEVER represent landlords, always avoiding this conflict of interest. So, which of our competitors—leasing firms—do the most landlord representation? Who’s marketing the most space in San Francisco?
Below we’ve surveyed the entire 113 million square foot inventory of San Francisco, and illustrated the Top 25 companies listing the most space on the market. Of the top 7 companies, all are office leasing brokerage firms, controlling 65% of the City’s vacancy!
These brokerage firms are beholden to 400 local landlords, paid to drive up rental rates and drive down concessions for tenants.
Since their allegiance is committed to so many landlords, how can they possibly represent YOUR interests—the tenant’s interests—objectively and aggressively?
The top brokerage companies on the list control more of the City’s vacancy than Tishman Speyer, Shorenstein, Boston Properties and Hines. Surprised, are you not?
| % Market Share | Square Feet | # of Landlords/ Buildings | ||
|---|---|---|---|---|
The % in the chart below refers to the percentage of vacant space under exclusive listing by each company. The accompanying figure is the actual square footage available for lease. We have also noted the number of landlords / buildings represented by each entity. * Denotes listing brokers. All other companies listed are landlords/developers. |
||||
| 1 | *Colliers International | 14.1% | 2,636,078 | 108 |
| 2 | *The CAC Group | 10.0% | 1,855,412 | 72 |
| 3 | *Jones Lang LaSalle | 9.5% | 1,774,657 | 51 |
| 4 | *Cornish & Carey Commercial Newmark Knight Frank | 8.5% | 1,582,461 | 53 |
| 5 | *Cushman & Wakefield, Inc. | 7.7% | 1,428,230 | 53 |
| 6 | *Kidder Mathews | 5.1% | 958,818 | 44 |
| 7 | Tishman Speyer | 4.7% | 874,532 | 5 |
| 8 | *CBRE | 4.3% | 799,894 | 25 |
| 9 | Shorenstein Properties, LLC | 3.4% | 627,818 | 7 |
| 10 | *Cassidy Turley | 2.3% | 425,509 | 31 |
| 11 | SKS Investments | 2.2% | 404,000 | 2 |
| 12 | Beacon Capital Partners, LLC | 1.6% | 307,000 | 1 |
| 13 | Alexandria Real Estate Equities, Inc. | 1.2% | 215,370 | |
| 14 | Hines | 1.1% | 211,270 | 6 |
| 15 | *TRI Commercial / CORFAC International | 1.1% | 197,177 | 55 |
| 16 | Boston Properties Limited Partnership | 1.0% | 188,733 | 4 |
| 17 | *Avison Young | 1.0% | 184,156 | 5 |
| 18 | Kilroy Realty Corporation | 1.0% | 180,000 | |
| 19 | Flynn Holdings | 0.8% | 143,970 | 2 |
| 20 | *Sansome Street Advisors, Inc. | 0.6% | 106,457 | 14 |
| 21 | The Presidio Trust | 0.5% | 96,154 | 44 |
| 22 | *Terranomics Retail Services | 0.5% | 92,283 | |
| 23 | Regus | 0.5% | 90,000 | |
| 24 | *Starboard TCN Worldwide Real Estate | 0.5% | 89,564 | 32 |
| 25 | The Carlyle Group | 0.4% | 82,134 | |
| Total | 18,645,143 | |||
