Forget 2.0. How About 1.0?
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|Sure, tech is pumping adrenaline into the local office market, but some experts at Bisnow’s San Francisco State of the Office at the Intercontinental Hotel last week cautioned: don’t forget the traditional tenant, who will be around long after the next tech bubble bursts. (Our schnauzer is still waiting for his Pets.com order.)|
|ShorensteinVP Jim Collins says landlords are gravitating toward tech tenants (which often require double the occupancy) at the expense of losing traditional tenants. “Be conservative and treat your traditional stable of tenants as if they were long-term tenants,” he says. Shorenstein has redevelopment projects at Market Square (1.1M SF) and 188 Spear (200k SF). Twitter recently signed the lease to move to Market Square, while Amazon opted for 188 Spear. “We like building new buildings," Jim adds, "but I think building renovations are the wave of the future.”|
|BNBuilders’ Rob Melinauskas is also a big fan of renovations and has two major projects under way. One is a 400k SF structure at 875 Stevenson, which is being retitled as 110th St. The building will be reskinned—goodbye precast, hello glass curtain wall. Construction could start as early as this year. There's also 275 Brannan St (60k SF). Rob says the historic structure is getting a seismic upgrade, including new elevators. Rob, who grew up in Silicon Valley, watched his town "turn from orchards into buildings, so maybe that’s where I really picked up my love for this."|
|Still can't resist the tech tenant bandwagon? CBRE SVP Phil Tippett says, "If you’re a younger company, and you’re trying to grow (and compete with the Apples of Silicon Valley), you need the cool, edgy space—it needs to be really cool when they come to work." (But it can't think it's cool... because that's so not cool.) The tech market in San Francisco (which he estimates makes up 40% of the market) ensures a robust economy. “Our version of leveling out is probably the rest of the country’s version of glory days."|
|Speaking of the big picture, Kilroy's Mike Sanford thinks uncertainty about the elections and Eurozone signal a tumultuous short-term outlook. But locally, he says SOMA has been a strong market and submarkets from Sunnyvale to San Mateo have prospered as well.|
|Moderator Michael McFadden, attorney for sponsor Allen Matkins, asked: “What is the number one non-economic request tenants have when negotiating a lease?”|
|San Francisco native and Boston Properties’ Christine Ching hit the buzzer first: tenants are increasingly demanding non-relocation clauses during lease negotiations. They want to secure the prime location (and excellent view) at the Embarcadero Center (3M SF), which she oversees. “We negotiate that, almost every single lease.”|