DOCSLIB.ORG

SAN FRANCISCO OFFICE REPORT Supply Wave Offers Test For

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
SAN FRANCISCO OFFICE REPORT Supply Wave Offers Test For SAN FRANCISCO OFFICE REPORT Market Analysis Supply Wave Offers Test Second Quarter 2017 For Booming Office Market Contacts Jeff Adler Vice President & General Manager of Yardi Matrix [email protected] (800) 866-1124 x2403 Jack Kern Director of Research and Publications [email protected] (800) 866-1124 x2444 Chris Nebenzahl Senior Analyst [email protected] (800) 866-1124 2200 Veronica Grecu Senior Real Estate Market Analyst [email protected] (306) 955-1855 7583 As the leading technology market in the United States, San Francisco has Alex Girda exhibited the economic volatility that comes with the boom-and-bust nature Senior Editor of the Internet and software industry. Over the past decade, a significant influx [email protected] of venture capital has produced numerous startup firms and expansion among industry leaders. The strong and steady growth has impacted the city’s office market, leading to high occupancy rates and a robust development pipeline, with 9 million square feet currently under construction. Aggregated and anonymized expense and lease expiration Roughly 28,000 jobs were added in the 12 months ending in March, bolstered data is available to Yardi Matrix by the city’s tech sector and its proximity to Silicon Valley. Office-using subscribers. Please contact employment in San Francisco grew at a rate nearly twice the national us for details! average in 2016, leading to more job gains in high-paying positions. Leasing activity continued at high levels in the most established tech For more information please contact: submarkets—such as South Beach, South of Market and Mission Bay—where high-quality space is being added. Rates were highest in the Silicon Valley- Ron Brock, Jr. Industry Principal, Matrix adjacent Menlo Park-Palo Alto submarket, where average leases hit $72.49 [email protected] per square foot, while the Financial District claimed average rates of $63.06 as (480) 663-1149 x2404 of June. Roughly 57% of office stock is Class A, as is the bulk of listed space. To Subscribe: Strong investor interest led to more than $6 billion in office asset trades in Hollie Zepke the 12 months ending in June. Investors were focused on the more established Audience Development Specialist submarkets such as the Financial District and South Beach, where the bulk of [email protected] transactions occurred. Activity has exacted pressure on area acquisition yields, (800) 866-1124 x5389 leading the average for Class A urban assets to fall below the 5% mark. 1 Economic Snapshot San Francisco counted roughly 430,000 office-using jobs at the end of 2016, accounting for 38.5% of total employment, one of the highest rates in the nation and nearly double the national share of 21.7%. That’s consistent with the rate of growth of office-using employment, which grew at 4.5% in 2016, 220 basis points above the national rate. The metro has experienced rapid employment growth throughout the second half of the current cycle, pushed forward by the availability of venture capital and its tech segment. Office-Using Employment Source: Bureau of Labor Statistics (BLS). Data as of June 2017 San Francisco Employment Growth by Sector (Year-Over-Year) as of June 2017 Current Employment Year Change Code Employment Sector (000) % Share Employment % 65 Education and Health Services 203 13.5% 5,900 3.0% 90 Government 191 12.7% 4,400 2.4% 70 Leisure and Hospitality 199 13.3% 3,900 2.0% 15 Mining, Logging and Construction 65 4.3% 3,800 6.3% 40 Trade, Transportation and Utilities 222 14.8% 3,800 1.7% 80 Other Services 58 3.9% 2,700 4.9% 60 Professional and Business Services 318 21.2% 2,000 0.6% 50 Information 76 5.1% 1,500 2.0% 55 Financial Activities 95 6.3% 400 0.4% 30 Manufacturing 75 5.0% -600 -0.8% Sources: YardiMatrix, Bureau of Labor Statistics Office-Using Employment as a % of Total Employment Source: Bureau of Labor Statistics (BLS). Data as of June 2017 San Francisco Office Report | Second Quarter 2017 2 Leasing Trends Average leases in Class A office buildings rose 6.2% year-over-year through June, clocking in at $51.30 per square foot. Leases for Class B properties improved by 3.6% through that same interval, reaching an average of $40.50 per square foot. In addition to being the nation’s largest tech-driven economy, San Francisco is the West Coast’s financial services leader. Office space comes at a premium in established submarkets such as the city’s Financial District ($63.06), and in submarkets in Silicon Valley such as Menlo Park-Palo Alto ($72.49). Average leasing rates are rapidly growing in Mission Bay ($54.98) and South Beach ($53.86), where signifi- cant construction is underway. South Beach led all submarkets in leasing activity year-over-year through June (5.6 million square feet), topped by Salesforce occupying 868,000 square feet at 415 Mission St., the largest lease signed in the past 12 months. Lease Rate Growth ($ Per Square Foot) Lease Rates by Submarket Avg. Lease Rate Top 5 Submarkets as of June 2017 Menlo Park-Palo Alto $72.49 Financial District $63.06 San Rafael $55.37 Mission Bay $54.98 South Beach $53.86 Source: Yardi Matrix. Data as of June 2017 Source: Yardi Matrix. Data as of June 2017 Top 10 Leases Signed (Last 12 Months) Address Square Feet Leased Tenant 415 Mission St. 867,982 Salesforce 211 Main St.. 371,825 Charles Schwab 430 California St. 247,000 Union Bank 2100 University Ave. 214,052 Amazon 3050 S. Delaware St. 210,000 SurveyMonkey 100 Independence Drive 205,222 Facebook 350 Bush St. 185,000 Amazon 101 Oyster Point Blvd. 163,000 AstraZeneca 303 Second St. #800 N. 150,000 AppDynamics 395 Hickey Blvd. 140,000 Kaiser Permanente Source: Yardi Matrix. Data as of June 2017 San Francisco Office Report | Second Quarter 2017 3 Listings and Vacancy Roughly 5.4 million square feet of office space was listed as of June 2017, at an average asking price of $54.71 per square foot for Class A and A+ space, and $45.07 per square foot for Class B. In spite of the premium put on office space in the market, overall vacancy remains relatively low, at 8.5% as of June. A large slate of new office space is set to be delivered over the coming quarters, but strong leasing is already pointing toward maintained vacancy levels in the short term. San Francisco’s CBD posted an average vacancy rate of 8.0%, with 1.7 million square feet of space currently available for lease. Vacancy is lowest in the market’s secondary urban quadrant (5.7%), as the high asking rates in the CBD and urban primary regions have led to a contraction of availability in secondary locations. Suburban assets maintained relatively low vacancy rates year-over-year, as fast absorption is eating up available space within the San Francisco city limits. Meanwhile, increasing asking rates are pushing tenants to look for space in fringe submarkets. As a result, vacancy in primary suburban (11.4%) and secondary suburban (10.5%) areas will likely decline. The Mission Bay submarket boasts one of the metro’s lowest vacancy rates (5.6%), but that may change given the more than 2 million square feet of space under construction. At 26.7%, vacancy is highest in the Colma- Brisbane submarket, which is just outside the San Francisco city limits. A wave of new developments in the urban core has attracted the attention of urban-focused tenants. Available Properties Vacancy by Location Class Square Feet Properties Location Class Vacancy Rate Top 5 Submarkets Available Available Suburban - Primary 11.4% Foster City 773,624 19 Suburban - Secondary 10.5% Financial District 598,549 37 CBD - Primary 8.0% Redwood Shores 541,354 14 Urban - Primary 7.1% San Mateo 434,214 21 Urban - Secondary 5.7% South Beach 379,273 20 Source: Yardi Matrix. Data as of June 2017 Total Market 5,409,199 230 Note: Vacancy including sublease. Source: Yardi Matrix. Data as of June 2017 Vacancy by Submarket Top 5 Submarkets Vacancy Rate San Francisco - Southwest 3.4% North Beach 4.2% South San Francisco 4.2% San Rafael 4.5% The East Side 4.5% Source: Yardi Matrix. Data as of June 2017 San Francisco Office Report | Second Quarter 2017 4 Supply Although new office space has been added at a steady rate over the 12 months ending in June, deliveries are set to spike in 2017, as nearly 5.7 million square feet of office space is projected to come online. That’s just 150,000 square feet more than the total developers added to the market between 2014 and 2016. Work is underway on 29 projects totaling roughly 9 million square feet of office space, with an additional 22 million square feet in the planning and permitting stages. San Francisco’s office pipeline points toward heightened development activity throughout the coming years. Development activity is high in established submarkets located within San Francisco’s city limits such as South Beach (3.6 million square feet) and Mission Bay (2 million square feet). The largest property scheduled to come online in 2017 is the 1.4 million-square-foot Salesforce Tower in South Beach, at the heart of the San Francisco Transbay redevelopment plan. Office Completions (Square Feet) Source: Yardi Matrix. Data as of June 2017 Construction Activity (Total Square Feet) Construction Activity (% of Inventory) Square Feet Under Square Feet Under Top 5 Submarkets Construction Top 5 Submarkets Construction South Beach 3,643,728 Potrero Hill 132.7% Mission Bay 2,062,026 Millbrae - Burlingame 42.2% Millbrae - Burlingame 689,810 Mission Bay 32.2% Foster City 397,000 Sebastopol 24.7% Colma-Brisbane 391,794 Colma-Brisbane 24.1% Total Market 8,893,846 Total Market 8.6% Source: Yardi Matrix.
Load more

Recommended publications
  • Urban Retail Services
    Urban Retail Services Customized Real Estate Services Accelerating success. Urban Retail Services The Americas Providing a full suite of services including: • Agency • Retail Location Strategy & Analytics • Mixed Use • Restaurant & Food Services • Investment Sales & Triple Net • Property Management • Project & Construction Management • Portfolio Development 2 | Urban Retail Services Urban Retail Services | 3 4 | Urban Retail Services Our Services Colliers International is a leading global real estate services organization defined by our spirit of enterprise. Through our culture of service excellence and a shared sense of initiative, we have integrated the resources of real estate specialists worldwide to accelerate the success of our clients. Our 403 offices worldwide share a common brand and vision to provide the best service experience available. To us, that means empowering our teams to partner with each client, truly listening to their unique business needs and designing an integrated service offering. Our goal is to make your real estate a competitive business advantage and meet your entire range of property needs. And through it all, our professionals go the extra mile in their attitudes and actions, allowing our values of expertise, community,service and fun to come through in everything we do. Retail Services 150+ 500+ Number of Markets Retail Professionals Urban Retail Services | 5 Case Study Swatch Challenge When Switzerland’s biggest multi-brand watch company sought to expand into major cities across the United States, Swatch Group (Breguet, Harry Winston, Blancpain, Omega, Rado, Tissot, Balmain, Hamilton and Swatch, among others) looked to our team for assistance. Strategy The Swatch Group introduced a new corporate plan to expand into very high profile locations and lengthen the terms of certain key stores in major cities nationally as well as internationally.
    [Show full text]
  • 10. American Realty City of Naples General Employees' Trust, Police
    April 27, 2018 City of Naples General Employees' Trust, Police Officers' Retirement Trust, and Firefighters' Retirement Trust Disclosures AmericanAmerican Realty Realty Advisors Advisors | 3 This presentation is for your information only and is neither an offer to sell nor a solicitation of an offer to buy any securities or financial instruments. The securities to which this presentation relates have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, any other U.S. federal or state or non-U.S. securities laws or the laws of any non-U.S. jurisdiction. The information in these materials is intended solely for within the meaning of Rule 501 of Regulation D under the U.S. Securities Act of 1933. Any product or service referred to herein may not be suitable for any or all persons. The information in this presentation has been obtained or derived from sources believed by American Realty Advisors to be reliable but ARA does not represent that this information is accurate or complete. Any opinions or estimates contained in this presentation represent the judgment of ARA at the time this presentation was prepared and are subject to change without notice. They should not be considered promises or advice. Performance analysis is based on certain assumptions with respect to significant factors that may prove not to be as assumed. You should understand these assumptions and evaluate whether they are appropriate for your purposes. Performance results are often based on mathematical models that use inputs to calculate results. As with all models, results may vary significantly depending upon the value of the inputs given.
    [Show full text]
  • American Realty Advisors to Be Reliable but ARA Does Not Represent That This Information Is Accurate Or Complete
    September 11, 2018 Bay County Retirement System Disclosures AmericanAmerican Realty Realty Advisors Advisors | 3 This presentation is for your information only and is neither an offer to sell nor a solicitation of an offer to buy any securities or financial instruments. The securities to which this presentation relates have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, any other U.S. federal or state or non-U.S. securities laws or the laws of any non-U.S. jurisdiction. The information in these materials is intended solely for within the meaning of Rule 501 of Regulation D under the U.S. Securities Act of 1933 and within the meaning of the U.S. Investment Company Act of 1940, as amended. Any product or service referred to herein may not be suitable for any or all persons. The information in this presentation has been obtained or derived from sources believed by American Realty Advisors to be reliable but ARA does not represent that this information is accurate or complete. Any opinions or estimates contained in this presentation represent the judgment of ARA at the time this presentation was prepared and are subject to change without notice. They should not be considered promises or advice. Performance analysis is based on certain assumptions with respect to significant factors that may prove not to be as assumed. You should understand these assumptions and evaluate whether they are appropriate for your purposes. Performance results are often based on mathematical models that use inputs to calculate results.
    [Show full text]
  • Fresno County Employees' Retirement Association
    FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION BOARD AGENDA LETTER DATE: February 1, 2017 TO: Board of Retirement FROM: Donald C. Kendig, CPA Retirement Administrator SUBJECT: Receipt and filing of QPAM Proposal for Advisory Services along with a Proposed Investment Management Agreement – RECEIVE AND FILE Recommended Actions 1. Receive and file QPAM Proposal for advisory services by American realty along with a proposed Investment Management Agreement (IMA), and 2. Provide direction to staff. Fiscal and Financial Impacts Proposed costs to provide full service Qualified Professional Asset Management (QPAM) services would be a fixed fee of $100,000, plus an additional fixed fee of 50 basis points (one half of a percent) of any amounts financed. Discussion At first, the amount might seem shocking; however, there is a substantial amount of work that will be required to underwrite, evaluate, and set up the real estate investment. The 50 basis point fee is remarkably low for the services contemplated in Exhibit A. For example, $4,000,000 financing would generate a fee of $20,000. This would be an entity on our side when it comes to negotiating rates and other lending commissions whereby the expertise could save well above that amount. Staff can likely handle the accounting. The intricacies of leasing might prove problematic, even though Colliers International is our broker. Given my recent experience, our Leasing Broker will come to me to ask what I want to agree to. I have to be honest. I am not exactly sure. American Realty would be very sure. Staff will ask what the proposed cost would be for just the property analysis and if $100,000 is firm.
    [Show full text]
  • Environmental Social Governance
    2018 Environmental Social Governance ANNUAL SUSTAINABILITY REPORT TABLE OF CONTENTS ABOUT AMERICAN REALTY ADVISORS 4 GOVERNANCE 6 ENVIRONMENTAL 14 SOCIAL 28 1130 Connecticut Ave | Washington, D.C. ABOUT THE REPORT Each year, ARA publishes an annual Sustainability Report, detailing the firm’s commitment to environmental, social and governance (ESG) principles, benchmarking and reporting efforts, and sustainability successes. This report shares sustainability-related information that is critical to ARA’s stakeholder groups including clients, investors, tenants, employees, partners, and communities. The social section covers data as of December 31, 2018 and early 2019 initiatives, while all other sections, including the performance data, are as of December 31, 2018. References to assets in this report relate to assets in all portfolios managed by ARA. The 2018 ARA Sustainability Annual Report will be available on our website as well as our past reports, at: www.aracapital.com/corporate-responsibility-and-sustainability On the Cover: 121 Seaport | Boston, MA 2 | ARA ANNUAL SUSTAINABILITY REPORT 2018 ARA is committed to social responsibility and to making a purposeful difference in our communities and in our industry. We are pleased to share American Realty Advisors’ 2018 Sustainability Report, outlining our ESG program and the ‘green’ initiatives we have implemented throughout our firm and at the assets we manage on behalf of our clients. At ARA, we believe including ESG principles improves our ability to meet commitments to our clients, as well as to align our investment activities with the broader interests of society. Our ESG program is focused on increasing the value of our portfolios, while creating healthier building environments, reducing operating costs, and minimizing resource use for the benefit of all stakeholders.
    [Show full text]
  • REPORT 2019 ARA ESG Report
    2019 ESG REPORT 2019 ARA ESG Report TABLE OF CONTENTS About the Report 3 CEO Letter 4-5 About American Realty Advisors 6-7 2019 ESG Accomplishments 8 Sustainability Goals 8 GOVERNANCE 10-23 Philosophy on Corporate Citizenship 11 Sustainable Development Goals 12 PRI 13 ESG Committee 14 ESG Program Structure 15 Corporate Best Practice Policy Guides 16-17 Resiliency and Environmental Risk Management 18-19 Responsible Business Practices 20 Case Study: GRESB 23 ENVIRONMENT 24-43 Mission, Vision, Values 25 Commitment to the Environment 27 Sustainable Construction Strategy 28 Benchmarking Ordinances and Compliance 29 Performance Targets 30 Data Coverage 31 Sustainable Initiatives 32-33 Biodiversity 35 2019 ARA ESG Core Fund Breakdown 36 Environmental Management System 37 LEED Certifications 38 ENERGY STAR Recognition 39 Additional Green Building Certifications 40 Data Management 41 Case Study: 5 MLK 42-43 SOCIAL 44-57 Stakeholder Engagement 45 Earth Day 46 ESG Training 48 Property Feature: Art at 499 Park 49 ESG Newsletters 49 Health and Wellness 50 Active ARA 51 Supporting Social Change 52-53 Giving Back to our Local Community 54 Matching Gifts Program 55 Case Study: Fitwel 57 Program Partners 58-59 Reporting, Disclosures, Forward Looking Statement 60-61 ABOUT THE REPORT American Realty Advisors (ARA) publishes an annual ESG Report each year that documents our ongoing commitment to environmental, social and governance (ESG) principles, benchmarking and reporting efforts, progress towards our goals and targets, and sustainability successes across our portfolio. This report shares sustainability-related information that is critical to ARA’s stakeholder groups including investors, tenants, employees, partners, and communities.
    [Show full text]
  • Environmental Social Governance
    2017 Environmental Social Governance Sustainability Annual Report Building a Sustainable Future for Our Clients and Communities Engagement of our stakeholders is a major catalyst for change and one that will lead to meaningful and productive work towards achieving key ESG initiatives. As ARA looks toward the future, we must not only engage in sustainable practices but take action to evolve, create, and implement new methods of addressing Environmental, Social, and Governance (ESG) issues. Having the responsibility to manage assets on our clients’ behalf is a privilege and one we treat with fiduciary care. As a steward of the capital of others, ARA is committed to creating value for our clients and investors through seeking to provide high-quality service and exceptional returns as well as making a positive contribution to society. The sustainability program at ARA is focused on providing a benefit to all of our stakeholders, including our clients, investors, tenants, industry partners, employees, and the communities in which we operate. Through the direction of our sustainable mission, vision, and values we believe activating and igniting our asset managers, property managers, and employees is a vital part of the process of implementing the best sustainable practices at our assets and in our environment. We see the engagement of our stakeholders as a major catalyst for change and one that will lead to meaningful and productive work towards achieving our ESG initiatives. ARA embraces our responsibility to make a purposeful difference in our communities. The ARA Charitable Foundation has been active for the past 20 years in supporting a wide range of empowerment and action initiatives both locally and nationwide.
    [Show full text]
  • Real Estate Issues ®
    REAL ESTATE ISSUES ® Published by THE COUNSELORS OF REAL ESTATE ® Volume 36, Number 2, 2011 INSIDERS’ PERSPECTIVES Global Property Outlook and Role Turkey: Modernizing through of Real Estate in the European Financial Crisis Mall Development Investing in Emerging Markets: Asian Tigers and Lion Kings China, India and Brazil Public-Private Partnerships: Go South, Young Men (and Women…) Lessons From Military Housing Key Investment Considerations in Latin America RESOURCE REVIEW Seller Beware: The Impact and Consequences to Date of Asian Investment in Metro When the Boomers Bail: Vancouver’s Real Estate Market A Community Economic Survival Guide ® ® www.cre.org REAL ESTATE ISSUES ® Published by THE COUNSELORS OF REAL ESTATE ® EDITORIAL BOARD EDITOR IN CHIEF Mark Lee Levine. CRE University of Denver, Peter C. Burley, CRE Denver, CO National Association of REALTORS ®, Washington, DC Gerald M. Levy, CRE Gerald M. Levy & Co. LLC, New York, NY ASSOCIATE EDITOR Marc Louargand, CRE Mary C. Bujold, CRE Saltash Partners LLC, West Hartford, CT Maxfield Research, Inc., Minneapolis, MN Timothy R. Lowe, CRE LIAISON VICE CHAIR Waronzof Associates, Inc., El Segundo, CA Otis E. Hackett, CRE David J. Lynn, Ph.D., CRE Otis E. Hackett & Associates, Solana Beach, CA ING Clarion, New York, NY 2011 EDITORIAL BOARD Richard Marchitelli, CRE Owen M. Beitsch, Ph.D., CRE Cushman & Wakefield, Inc., Charlotte, NC Real Estate Research Consultants, Orlando, FL Michael S. MaRous, CRE Charles Brigden, CRE MaRous & Company, Park Ridge, IL Clarion Associates, Inc., Chicago, IL William P.J. McCarthy, CRE Michael Y. Cannon, CRE W.P.J. McCarthy and Company Ltd., Burnaby, BC Canada Integra Realty Resources, Miami, FL Brent A.
    [Show full text]