Companies Seek Office Space That Follows The Employee Base
Bay Area companies have to consider many things when looking at office space, but a key factor is where employees live and how they will get to work.
Companies are starting to realize they need to have offices in multiple locations, Jay Paul Co. Chief Investment Officer Matt Lituchy said at Bisnow's recent Office West event, and a big part of that is to be closer to where employees live.
At Forest City's 5M development in San Francisco, there are some office tenants that are interested in the idea of employee housing within the mixed-use development, Forest City West President Kevin Ratner said.
Meanwhile, Silicon Valley companies continue to beef up their presence in San Francisco, where many of their younger employees live, and others are opening offices in the East Bay or on the Peninsula.
San Francisco does have its challenges. As apartment rents continue to rise, many members of NerdWallet's young workforce have opted to live in the East Bay, and some in the South Bay, because prices are lower and transit can get them to the office, NerdWallet Head of Workplace Operations Giselle Bonilla said.
"You look at the Peninsula today and things walking distance from a Caltrain station are in huge demand," Tishman Speyer Senior Managing Director Carl Shannon said. Companies will continue to spread to other cities that are less expensive, such as Seattle, because the Bay Area is such an expensive place to live and work, he said. But he said he thinks many companies will continue to grow in the Bay Area.
Most of the developers at the event had a positive outlook for the market despite the sense that a downturn may be imminent after the current cycle has lasted so long.
It would be foolish to say there won't be another correction, because there will be, Lituchy said, but the high-end talent still needs to be in the Bay Area.
"The kind of companies that are going to need the space we've been talking about, they're not going to go away," he said. "If we do have a flattening or even go backwards, there are opportunities we all try to take advantage of."