Rent for office space in Bay Area drops
Bloomberg News Service
NEW YORK Asking rents for office space will drop as much as 18 percent in the San Francisco Bay Area this year, as the market cools after a boom in Internet and technology related leasing, according to a new study.
Brokerage Cushman & Wakefield said rents would drop 13 percent in downtown San Francisco over the course of the year, 18 percent outside of the downtown financial district and 16 percent in the Silicon Valley, after rising as much as 80 percent in some technology-heavy districts last year.
The declines in rents will be "a healthy correction," after an "astounding" run up over the past two years, said Maria Sicola, senior managing director of analytics at the brokerage.
"2000 was an anomaly in the office markets in many cities around the country," Sicola said in a statement. "We had unnatural rental growth, and this was most pronounced in San Francisco."
In 2002 and 2003, downtown San Francisco will experience "mild rental growth," as the vacancy rate stabilizes at around 10-12 percent and rents recover to the low $60-range per square foot, down from $69.84 last year, the study found.