Markets & EconomyRentals

Tech companies in San Francisco account for more than half of office tenants

Housing costs making recruitment of tech employees more difficult
  • Office asking rents are at historic highs in San Francisco.
  • Rents, lack of vacancy and employees' housing costs are pushing some firms to the East Bay.
  • Tech firms have pre-leased most of the space at office developments slated to come online.

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Similar to San Francisco's rental and for-sale housing markets, the city's office sector is being driven by tech industry growth. "It's really all about the tech firms. Everyone that has a tech component is looking for space," said Robert Sammons, regional research director at Cushman & Wakefield, adding tech-related companies account for between 50 percent to 60 percent of all firms leasing space in the city. The demand for space is such that buildings slated to come online during the first half of 2016 are nearly 100 percent pre-leased, primarily by tech firms. This active tenant demand points to continued decreases in vacancy and positive absorption, along with historic rent growth, according to a Cushman & Wakefield office report. Citywide, the overall asking rent closed at a record high of $68.14 per-square-foot during the fourth quarter. These sector positives aside, Sammons notes that San Francisco still has an issue with housing costs and that this issu...