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Jack Cooper
Jack Cooper
  • 1 Minute Read
  • 05th December 2013

Tech firms' appetite for San Francisco office space

Technology and Internet-based companies have leased 40 percent more San Francisco office space since the first quarter of 2010, according to a CBRE report.

Technology firms now fill 22 percent of all occupied San Francisco office space, a historical high. Such firms have created 23,500 jobs - 86 percent of all new office positions in the city.

These figures highlight the amazing contributions the technology sector is making to the San Francisco economy, but also reveal a concerning reliance on a single sector historically prone to intense booms and busts.

Advice from San Francisco's industry leaders is that investors need diversify their portfolios.

"When you look at the job-growth figures, it's so dominantly tech that should it falter, it would have a big impact on the market," said Colin Yasukochi, director of research and analysis at CBRE and the principal author of the study.

Considering the technology sector is currently booming, an imminent bust is expected.

During the first dot-com boom, office vacancy in the city shrunk to 2 percent in 2000, according to the report. By 2003, after the bust, that figure swelled to 19 percent. San Francisco lost more than 70,000 jobs in the aftermath, according to California's Employment Development Department.

Here's another troubling sign in the CBRE report: One big factor that magnified the impact of the dot-com bust was that companies were leasing far more space than they needed, in anticipation of growth that never materialised. Firms were far more disciplined for the next decade, but the numbers show wide-eyed enthusiasm taking hold again.