Mid-Market is booming, with sexy new projects in the pipeline and a growing tech scene. We gathered some of the city's commercial real estate elite this morning at Hotel Nikko for Bisnow's Future of Mid-Market event to tell us what comes next.
Shorenstein SVP Todd Sklar says it's hot neighborhoods like Mid-Market that are making other US cities jealous. But transportation and new housing availability is key for sustained growth, he says, and the affordability crisis is a huge threat to the economy going forward. Todd says today's tech companies don't want to be in classic office sites like Embarcadero Center; they want cool, authentic and raw properties. Mid-Market has even welcomed in some new co-working facilities.
Hudson Pacific SVP Drew Gordon says Mid-Market is replicating SoMa, adding lots of new offices, residents and amenities. That has attracted big-time tenants, like Uber and Square, which set up shop at 1455 Market (owned by Hudson). He says strong companies are what make this boom different from the dot-com one because they are much more engaged with the city and giving back (look at Salesforce and Facebook's CEOs). They also have visible revenue streams this time around, citing Uber as an example (he took one to the event).
BNBuilders principal Sean Truesdale says we can thank Mid-Market trendsetters like Shorenstein, which did a lot with buildings like Market Square that had great bones (Twitter bit). One challenge Sean sees is related to permits and inspections, as there are millions of square feet under construction and the sheer volume of work is a hurdle for the city to handle. As a builder you can't call at 3pm to get an inspection the next morning. Sean says it's clear companies need space; when he tours tech offices it's hard to find a free conference room, as employees are all stacked on top of one another. He's realistic about these great times, however: "Everything that goes up must level out."
DCI Engineers principal Jeff Brink asked panelists to open up about concerns of a bubble. Drew says the market will naturally go down, and the best thing to do as a landlord is to keep a clean balance sheet. And when the market turns, forget about high rates and focus on occupancy and keeping buildings full. Because when rents start falling, tenants will scatter. If you can't hang on to them, you won't survive.
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