Downturn? What downturn? According to the San Francisco Business Times website, construction has begun or is soon to be in progress on about 1.9 million square feet of commercial building space— a "speculative commercial development boom unmatched since the 1980s." Even with about 9.7 million additional square feet of office space set to be made available in the next three years throughout the Bay Area, developers are still gambling that they can fill the spaces in town at rents that exceed those in Silicon Valley or even more affordable parts of the city.
It's true that many tech firms with a San Francisco presence have been gobbling more office space. And we've seen plenty of evidence lately that tech firms are interested in having a San Francisco presence— a "satellite office" if not more. MySpace, Wikipedia, Google, Suntech, and more have done so. Developers may be overoptimistic, however, if they expect these firms to uproot more than a handful of employees/operations simply to have a zip code in the 941XX. While it's true the very successful companies may have money to burn, both government regulation and market realities have forced many companies to watch the bottom line. We'll allow that there'll be some marquee companies that want to be in marquee buildings. However, there may just not be the incentive for the rest to spend upwards of $70 a square foot on rent. San Francisco, 90210? We had better start working on the blogging wardrobes, stat.
· Speculation frenzy [San Francisco Business Times]