San Francisco to Become the New Manhattan

July 11th, 2014

San Francisco to Become the New Manhattan

As published in a recent article by the San Francisco Business Times, written by Blanca Torres. San Francisco office rents are soaring to all time highs. Office rents in San Francisco are on pace to exceed those in Manhattan by 2015.

The largest factor affecting office leasing rates in San Francisco is the technology boom. Up and coming technology companies are acquiring a tremendous amount of office space and pushing office rents higher and higher.

“When I look at top 10 deals this year, they are all tech companies,” says Colin Yasukochi, research director for CBRE. Tech companies like Salesforce are taking up more than 714,000 square feet of office space, and LinkedIn is taking up more than 450,000 square feet of space. This is leading the charge in driving up rates.

Tech leasing began impacting the San Francisco office market in late 2009, and is currently peaking in 2014.

Rental rates are up 14% in the second quarter, as compared to the same quarter last year. The average price per square foot for offices in San Francisco is nearly $60, which is 4.7% higher than last quarter, and more than 7% higher than the start of last year.

“If rents keep climbing at the current rate, San Francisco could surpass Manhattan in 2015 as the most expensive office market in the country,” said Yasukochi.