888 Brannan Street Jewelry Mart repositioned for office use
January 26th, 2009 Filed Under Development Updates, Showplace Square, South of Market, Zoning & City Hall Issues
The new owners of the long time home of the San Francisco Gift Center and Jewelrymart have begun their expected transition of the property by announcing the introduction of an office component. The Eastern Neighborhoods Plan, recently approved for implementation, allows a mixed-use to take place that drastically improves the market value of the property by increasing what the owners will be able to charge in rental rates.
As you will see below in the article from the San Francisco Business Times, the SOMA/ Showplace Square area in which 888 Brannan is located suffers from high vacancy numbers yet it enjoys high rental rates at the same time. These two numbers normally work against each other but the uniqueness of these neighborhoods create a marketability to tech tenants and smaller tenants that is not comparable to other submarkets. Also, the great majority of available space is tied up in large properties that are still undergoing a transition and not necessarily suitable for a 5-25K sq ft user, 370 Third and 1355 Market Street being the best two examples.
From a tenant’s perspective this is welcome news. [More...]
Real stats, real numbers: 2008 market wrapup
December 29th, 2008 Filed Under Financial District, Mission Bay, North Beach/ Waterfront, Showplace Square, South of Market, Tenant Activity
As the year grinds to an end and we look back at the recent damage that has been done to our great Country’s financial markets I thought it would be beneficial to my clients to publish some real data. We are all well aware by now of what has happened to the stock market, the unemployment rate, and of course the equity of some of our most famous corporate institutions. How all of this will have an affect on San Francisco’s commercial real estate rental rates and vacancy numbers has yet to be determined however.
What we do know is that in the most general of senses rental rates are dropping, building values are dropping, vacancy rates are increasing, sublease space is increasing, and the velocity of deals happening in the marketplace is at a minimum. The uncertainty surrounding what 2009 will bring and what affect the bailout will have on the economy has left most of us doing whatever we can to cut costs and be efficient moving forward. This mentality applies even to those companies with strong [More...]
San Francisco Police Department leases two buildings in Showplace Square
December 23rd, 2008 Filed Under Showplace Square, South of Market, Tenant Activity, Yerba Buena, Zoning & City Hall Issues
The San Francisco Police Department has completed a deal to take the entirety of two buildings in the Showplace Square submarket. 1401 16th Street and 1700 17th Street comprise roughly 77,000 56,000 square feet of combined space and occupy the whole 3/4’s of a block surrounded by 16th, 17th, Carolina, and DeHaro Streets. The 1700 building is the former Jamba Juice headquarters before they moved to the East Bay, and it has been available for lease since that time.
This lease is significant for the area and will likely change the face of an already enjoyable place to spend time. One block away is the Whole Foods Market, two blocks away is 251 Rhode Island where Live Nation has taken space recently, and several blocks North is the heart of Showplace where the State-named Streets (Vermont, Kansas, Rhode Island) meet up with the SOMA [More...]
Office rents continue to drop, recent leases give teeth to the decline
December 12th, 2008 Filed Under Development Updates, Financial District, Mission Bay, North Beach/ Waterfront, Showplace Square, South of Market, Tenant Activity, Yerba Buena, Zoning & City Hall Issues
The well acknowledged market slowdown in San Francisco’s financial district has finally started to show itself in the form of actual lease transactions. Predictions that rental numbers were headed South have been around for quite some time of course but now the theories have some teeth. Tenants have been pushing very hard on landlords for more concessions and lower numbers, landlords have been actively cutting rates and increasing concessions to appeal to tenants, but the truth is activity is slowed as a whole, which means there are fewer tenants to pursue.
The majority of tenants that have decisions to make have been pushing back the date in which they plan to make those real estate location decisions. That being said some tenants have a lease expiration now, and some tenants may see this as the best time to grab a lower rental rate while the opportunity exists. Wells Fargo made some very intelligent and well documented real estate space decisions following the dot com era, and their recent commitment to 55,000 square feet at 45 Fremont may once again prove to be brilliant timing. [More...]
San Francisco Development Update: Jessie Street Explained
September 24th, 2008 Filed Under Development Updates, Financial District, Midmarket/ City Hall, Mission Bay, Showplace Square, Zoning & City Hall Issues
John King of the San Francisco Chronicle is a fantastic writer, and today he covered a little know street that happens to be ground zero for the Transbay development we have covered extensively on this blog. Jessie Street runs in-between Market and Mission, and starts at 1st Street just across from the food court.
It has been well reported now that this area is slated for vertical growth [More...]
San Francisco Office Update: End of August Vacancy Report
September 3rd, 2008 Filed Under Financial District, Mission Bay, North Beach/ Waterfront, Showplace Square, South of Market
The information below represents a breakdown of the number of buildings currently advertised as available here in San Francisco. For the sake of this explanation, I use three broad submarkets and search for spaces available in a variety of sizes. Visit the “Current Vacancies & Market Stats” tab at the top of the page for a downloadable version of this information.
South of Market Vacancies as of August 31, 2008:
- 27 buildings have spaces between 5-10K sq.ft.
- 19 buildings have spaces between 10-15K sq.ft.
- 17 buildings have spaces between 15-25K sq.ft.
- 15 buildings have spaces between 25-50K sq.ft.
- 12 buildings have spaces between 50-100K sq.ft. [More...]
San Francisco Office Update: Symantec, Sports Basement, & Nokia all renew
September 2nd, 2008 Filed Under Financial District, Showplace Square, South of Market
It was a busy week heading into Labor Day as three solid San Francisco tenants all renewed their leases instead of taking new space. As reported by Ryan Munneke and Megan Gilmore from the Costar Group, Nokia, Symantec, and The Sports Basement chose to either exercise options, or renegotiate and expand within existing properties.
What this says about the marketplace is unclear because the negotiations and strategies are unknown at this point. It does however raise the conversation of the current cost of tenant improvements if and when tenants do choose to relocate to new buildings. Unless a new space lays out perfectly, tenants in today’s market are typically out of pocket on construction costs, as the amount being contributed by landlords does not cover the work needed.
We will discuss more about this in future postings, I will try to nail down some real numbers and report back. The important thing to take away from this line of thinking however is that when tenants pay for their own improvements, they typically consider the dollars spent a loan, and the monthly cost to service that loan is tacked onto rent and called “occupancy cost”. This allows for fair comparisons to alternative properties. [More...]
