Web Shakeout Lowers Office Rents
SAN FRANCISCO (AP) _ The dot-com meltdown is flooding the San Francisco office market with vacant space and lowering average rents in the city’s main business district for the first time in more than two years, according to a real estate study.
Rents for prime downtown San Francisco office space averaged $74.16 per square foot in the first quarter, down 7.5 percent from an average of $80.16 per square foot in the fourth quarter, according to the report, by the Rosen Consulting Group and Cushman & Wakefield.
It marked the first quarter-to-quarter rent decline for so-called Class A space in San Francisco’s financial district since the end of 1998, when landlords charged an average of $47.75 per square foot.
Propelled by a wave of Internet businesses, the city’s office rents rose to the most expensive in the country. As of June 2000, the Class A vacancy rate in San Francisco’s financial district stood at 0.6 percent.
Rents are reversing, the report concluded, because so many San Francisco dot-coms are failing, opening up more space on the market.
Internet companies accounted for 77 percent of the 3 million square feet returned to the San Francisco office market between October 2000 and February 2001, the report said.
Internet companies now occupy about 6 million square feet of office space _ roughly 9 percent of San Francisco’s total supply.
On the Net: