Cresa San Francisco Bay Area’s Post

The San Francisco office market continues to build momentum into 2024. Net absorption was positive led by OpenAI's occupancy of 486K SF in Mission Bay, while vacancy increased to all-time highs and availability stayed flat quarter-over-quarter. Given the vast amount of space on the market asking rates continue to decrease. The technology sector, heavily impacted by layoffs and economic pressures, continues to face difficulties, influencing market recovery. Building sales are reshaping the investor landscape, providing opportunities for buyers to reset rental rates amidst a growing demand for flexible lease terms and financially attractive sublease options. https://lnkd.in/g3wh_dXc #sanfranciscobayarea #office #occupiers #CRE

Sorry to Say, the San Francisco Office Market is Not Getting Better…just yet A recent article in Bisnow July 8, 2024 cited San Francisco Class-A office vacancy increasing for the 10th consecutive quarter, “as more than a third of the city's office buildings remain empty.  The vacancies, brought on by layoffs and hybrid work, are expected to remain elevated through the end of the year. Placer.ai’s monthly data shows that San Francisco office workers are coming into the office the least of any of the top 10 metros, with visits down 49.2% in June compared to the same month in 2019.”  There ae millions of square feet of tenants looking for office space, but for the most part there is extensive downsizing. I read in another recent article that there are over 1100 Artificial Intelligence companies now based in San Francisco. Then to further depress us in the office building industry, July 9, 2024 headlines in Biznow “Billionaire Investor Howard marks Says 70% Discount On Offices Might Not Be Enough.” Marks is the co-founder of Oaktree Capital Management, “which specializes in distressed lending, and has $192B of assets under management. Forbes places Marks’ net worth at $2.2B.” I went to Google to find out how I could invest in Oaktree but “hey had no individual clients”. Darn! #SanFrancisco; #Office; #OfficeLeasng; #AI; #SIOR

San Francisco continues its promising start to 2024 with several signs pointing towards a turning point in the city’s office market recovery. Four 100k+ sf leases from the City of San Francisco, Scale AI, Rippling and Orrick set the pace for the quarter with a combined 642k sf, marking the third straight quarter of leasing growth. Positive momentum is expected to continue with more than 6.1 msf of tenant requirements in the market. Additionally, the percentage share of remote job postings has now fallen below 20% for the first time since Q4 2021 at 19.4%, outlining the continued trend of return-to-office. However, low investment volume in the office sales market shows a continued disparity between potential buyers and sellers. Ross Robinson Dina Simoni Gouveia Mark McGranahan Nick Slonek Avison Young #sanfrancisco #realestate #commercialrealestate #avisonyoung

Excited to see #McKinneyNewsSource highlight Scott Morse, SIOR, CCIM Corporate Real Estate Advisor’s recent insights from a Bisnow article about the state of the DFW office market! As a market leader in DFW office real estate, Citadel Partners is proud to share expertise that helps tenants navigate today’s evolving landscape. Andy Goldston, CCIM, a leader in our Fort Worth office, shared three critical insights every office tenant should know in a recent perspective piece for our website. In a market where every situation is unique and landlords’ positions vary, having the right advisor by your side makes all the difference. At Citadel Partners, we’re committed to providing the strategic guidance and ongoing support tenants need to make informed, confident real estate decisions. Check out Andy's thoughts at: https://bit.ly/3VvVk7t #DFWOfficeMarket #TenantAdvisory #CommercialRealEstate #CitadelPartners

"Real estate brokers are excited about Amazon’s new mandate that goes into effect next month, requiring employees in the office five days per week. The policy is 'obviously, a huge shot in the arm for us,' said Colin Tanigawa, a vice president with Seattle-area commercial real estate firm Broderick Group, speaking at a Bellevue Downtown Association event on Tuesday. Tanigawa said he hopes Amazon’s move will be 'the lift that we kind of need' that may catalyze other companies wanting to get back in the office. That would help boost the outlook for real estate developers and brokers dealing with the aftermath of the pandemic and resulting work-from-home trends. In downtown Bellevue, office vacancies have risen from 3.2% in 2019 to a whopping 16.6%, according to a recent report from Broderick Group." 📰Read the full article at GeekWire: https://lnkd.in/dpSWs4zx 📊View Eastside Market Insights: https://lnkd.in/g-Q_5NqE

In San Francisco we've recently seen office assets trade at substantial discounts to prior values, seemingly presenting a once-in-a-generation opportunity. But despite historically low values, it takes a lot of courage to place the bet. The number one factor influencing the success of the investment is also the most difficult to predict: future net operating income ("NOI"). Investors can project that interest rates will begin to decline at some point, availing them of upside by lowering their cost of funds. They can think about the purchase as it relates to so called replacement cost, meaning how the purchase price equates to what it would cost to build the building new today (I find this to be a mostly meaningless data point). They can assess the return based on in-place NOI, and they can speculate as to the stability of such NOI. But what about vacant space? How long will it take to fill? Will they be able to hit the economics necessary to achieve their return objectives? How long will they need to hold the asset? All very challenging to predict in today's environment. In fact, even when buying at today's bottom, the risk envelope is higher now than it was in 2019 when investors had to pay premium pricing to win the bid. Then, while investors had to accept low going-in returns, they could reasonably project 3-5% year over year over rent growth over a 5-10 year hold period, continued low vacancy, and stability of in-place occupancy. Even if the market turned, it would do so in an orderly fashion, providing downside protection. Investors who buy San Francisco office today are betting occupiers will soon shift toward a more robust in-office workplace posture. They're betting the office still matters, that the pendulum swung too far. Over the past year or so, corporate leaders have argued more vociferously for the office, providing at least some reason for investors to be believe their thesis is correct, yet occupancy trends remain stubbornly flat. What do you think? Will today's brave investors be rewarded for buying San Francisco office? #sanfranciscooffice #placeyourbet #lowfogg

Very nice recovery, NYC!😁💪 Foot traffic in Manhattan office buildings in July reached its highest level in four years, according to Placer.ai, whose widely cited analyses are used to inform commercial real estate and business decisions across the country. While office visits nationwide reached 72.2% of pre-pandemic levels, the rebounds in New York City and Miami led the nation, with both regaining 90% of their July 2019 foot traffic, according to the firm. #nyc #realestate #nycrealestate #covidrecovery

Shout out to Katie Burke for coming to Philly to investigate whether national headlines about Philly's presumed "underperforming" office market are true. The verdict? It's fake news. "Kastle Systems" has been persistently cited to track office recovery, yet their market share varies greatly across their U.S. markets. If you have a 20% market share in Market X and directly compare it to an 80% market share in Market Y, that does 𝗻𝗼𝘁 produce accurate reporting. Their reporting is misleading and doesn't capture Philly's actual story. Costar's leasing, vacancy, and housing, and Placer.ai pedestrian data tell a more comprehensive story. In fact, Philadelphia's office vacancy rate is 300bps below the national average. 𝗔 𝗳𝗲𝘄 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀: • Of the top 20 U.S. metros, Philadelphia has the 4th 𝘭𝘰𝘸𝘦𝘴𝘵 availability rate, trailing only Saint Louis, Baltimore, and Minneapolis. • Developers have delivered 1,600 new apartment units in the Rittenhouse/Logan neighborhoods (the "CBD") since 2021, and 1,440 have already been leased. Renter demand is absolutely there and has been growing. • A walking tour of Philly's downtown tells a more accurate story than inaccurate data reporting. Katie does a great job covering this from a "boots on the ground" perspective, layered with local insights from Center City District, Brandywine Realty Trust, and OCF Realty. https://lnkd.in/eJ9CbrWA

🏙️ Dallas' #office market stands out, thanks to a blend of corporate relocations, favorable governance, and population growth. Despite challenges, the region's resilience is evident in its ability to attract big players and create new developments, keeping the economy in motion. “If I look back through the last few quarters, things have stabilized here, and, so, for me, that’s good news,” says Walter Bialas, “Hopefully, this year continues to stay stable and gradually improve.” More about Dallas' unique position in the #CRE landscape with our market analysis coverage -- read Commercial Observer: https://lnkd.in/eN9Ha3xq #Dallas #AYdifference

Wedbush Securities is relocating from its long-time downtown Los Angeles headquarters to smaller offices in Pasadena, reflecting the ongoing shift in the office rental market post-pandemic. As hybrid work becomes the norm, the firm is adapting its workspace to accommodate flexible arrangements. This move highlights broader challenges in Los Angeles County's commercial real estate, where sales volume has dropped 18.4% year-to-date. Despite current struggles, Chris Jackson anticipates a market rebound in 2025 as interest rates decline. #WedbushSecurities #CommercialRealEstate #OfficeMarket #HybridWork #LosAngeles #RealEstateTrends #MarketUpdate #NAICapital #BusinessAdaptation #CommercialLeasing https://lnkd.in/g_rAWVw7