Landlords are bracing themselves for the cooling off of San Francisco’s hot office market. Weak startup valuations and declining venture capital funding are tempering the growth of the tech-industry hub.
Office vacancy rates jumped in the second quarter by the most since the recession, Bloomberg reports, while sublease amounts have doubled. This means office owners who benefited from years of heavy leasing in the past, such as Airbnb and Uber, are rushing to close deals and secure rent.
Owners are looking to sign longer leases with creditworthy companies before rents slide, even offering concessions like free rent and cash for space improvements. “We may not be in a free fall, but it’s a sign of things to come,” Cushman & Wakefield S.F. managing director J.D. Lumpkin says. [Bloomberg]
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