Deep Throat: Landscape has become precarious. The economy has now clearly slowed.

We asked for an update from a local brainbox – a venture capitalist whose tenured company has more than 1B invested in public and private tech. We agreed not to disclose the VC’s name, but here’s his POV:

US equity markets rallied very strongly from December 2018 lows in 1Q, following a more dovish tone from the Fed in late January.

The economy has now clearly slowed from the synchronized global growth scenario we saw in 2018. Retail sales and industrial production are up ~3% and ~2% in May compared to 2018 peaks of ~7% and ~5%, respectively.

photo: Wikipedia Commons

The question has become whether the Fed can navigate to a soft-landing slowdown while avoiding a recession. As such, volatility has returned to risk markets over the past couple of months. The trade war has further complicated the matter, adding uncertainty to an already precarious situation. Read more

Q1 2019 Top Leasing Transactions
SAN FRANCISCO

Tenant Address Sq Ft
Pinterest 88 Bluxome 430,000
Asana 633 Folsom 268,000
Slack 45 Fremont 208,000
Google 215 Fremont 140,000
O’Melveny & Myers Two Embarcadero Center 77,000

SAN MATEO COUNTY

Tenant Address Sq Ft
Snowflake 450 Concar 102,000
Zvora 101 Redwood Shores 100,000
Zoox 4100 East Third Ave. 74,000
Indeed 1001-1051 E Hillsdale 37,000
Harpoon Thera. 131 Oyster Point 35,000

EAST BAY COUNTIES (Alameda/Contra Costa)

Tenant Address Sq Ft
Novartis 5959 Horton 62,000
Spaces 46,000
Vacancy Rates: Are Your Options Fading?
How many blocks of space are available for YOU? San Francisco County (Q4 2018 v. Q1 2019) San Mateo County East Bay Counties
5,000-9,999 sq. ft. 230/268
+17%
Call us for more info
10,000-19,999 138/154
+12%
20,000-29,999 48/51
+6%
30,000-39,999 15/18
+20%
40,000-49,999 14/16
+14%
50,000+ 35/38
+9%
Tenants should watch carefully to detect how and to what extent your field of options changes. Which size blocks of space are getting leased? Discussing vacancy and absorption rates can be confusing to some. What language makes sense to tenants? Tenants ask, “Tell me about my specific options. How many choices do I have?” Are your options fading, as a result of leasing activity? If you’re a small tenant look alive, because smaller spaces continue to be less available than ever. Call and let’s discuss.
1Q 2019 Office Market Performance

San Francisco, aka Camelot:

  • 10.4 M square feet available (direct + sublease).
  • 8.2% total available. Up 1/2%.
  • 4.2M sf under construction (will add 4% to total inventory).
  • Market size 121M sf
  • Total Net Absorption, 1Q: 164,000 sf.
  • 2018 Net Absorption, 5.1M sf.
  • Total 1Q leasing activity at 2.7M sf, lowest in 3 years.
    • Lowest number of transactions in 10 years.

San Mateo County:

  • 5 M square feet available (direct + sublease).
  • 9.1% total available. Up 1/2%.
  • 2.8M sf under construction (will add 6% to total inventory).
  • Market size 52M sf
  • Total Net Absorption, 1Q: -20,000 sf.
  • 2018 Net Absorption: -53,000 sf.
  • Lowest number of transactions in 8 years

Alameda/Contra Costa Counties:

  • 12.4 M square feet available (direct + sublease)
  • 11.2% total available. Up 1/3%.
  • 2M sf under construction (will add <2% to total inventory).
  • Market size 111M sf
  • Total Net Absorption, 1Q: -262,000 sf
  • 2018 Net Absorption, 785,000 sf
  • Lowest number of transactions in 9 years.

Santa Clara County (Silicon Valley):

  • 15.2 M square feet available (direct + sublease)
  • 9.2% total available. Up 1/2%.
  • 6.1M sf under construction (will add 5% to total inventory).
  • Market size 128M sf
  • Total Net Absorption, 1Q: -302,000 sf
  • 2018 Net Absorption, 3.42M sf
  • Lowest number of transactions in 10 years.

After reading through this Market Editorial, please see our collection of educational articles we’ve written for our tenant community.

Five Brokerage Firms Control 8M SqFt of Space Listings in 440 Buildings Listed: How Do You Spell “Conflict of Interest”?
When we approach a prospective new tenant client, we tell them that we NEVER represent landlords, always avoiding this conflict of interest. So, which of our competitors—leasing firms—do the most landlord representation? Who’s marketing 78% of the space in San Francisco?

The top companies controlling the most space available are NOT landlords….Rather, they are office leasing brokerage firms acting with the landlord’s interest in mind. They are:

CBRE
JLL
Cushman & Wakefield
Colliers
Newmark, Cornish & Carey

These brokerage firms control over 78% of all listings and are beholden to more than 440 local landlords, paid to drive up rental rates and drive down concessions for tenants.

Since their allegiance is committed to so many landlords, how can they possibly represent YOUR interests—the tenant’s interests—objectively and aggressively?

If Your Lease Will Expire Within The Next Three Years…
Or if there is another compelling reason to discuss your firm’s office leasing situation, please call us. For qualified tenants, we offer the following pre-contract services:

  • Free preliminary office lease and operating expense review;
  • Free consultation to discuss project management, Team formation and project schedule;
  • Market surveys and our specific tenant-driven leasing recommendations ; and
  • Assistance in selection and coordination of all Team members throughout planning and negotiation phases.
Our Clients Love Using GriddigCRE’s First Live Marketplace for Office Leasing Deal-Making
It’s the fastest, most collaborative, fool-proof way to speed through deal-making and get it right the first time. No surprises. No mistakes. The shortest distance to decisions and closed deals.

Try it FREE. Griddig improves the entire industry’s performance. Join Landlords, Tenants, Brokers and Service Providers in the LIVE MARKETPLACE and start your next deal today.
Thank You to Our Clients & Friends

We believe that representing tenants – and only tenants – is a noble cause, our specialty for over thirty years. We greatly appreciate our clients’ confidence and kind words about us, our level of advocacy and enthusiasm to negotiate aggressively ….. and mind the details while guiding the leasing process. Thank you!

THE SPACE PLACE, INC.
505 Montgomery Street, Suite 1100
San Francisco, CA 94111
C: 415-999-9244 
T:  @MihalovichCRE
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