It’s not just the tech funding cycles that have slowed down.
In an earnings call on April 27, Boston Properties President Doug Linde cautioned that the race for commerical real estate has also tempered in San Francisco.
“I think the big difference between the market then i.e. in 2014 and 2015 and today is really the lack of large growth requirements, and by that I mean big tenants over 300,000 square feet,” Linde said in the company’s earning call, according to a Seeking Alpha transcript.
“So at the moment, there is no 300,000 square foot greater requirement that we are tracking in the market.”
Linde continued, “In 2013, 2014 and 2015, you had unprecedented large growth from Google, and Dropbox, and Salesforce.com, and Uber, and Stripe, and Slack, and LinkedIn, and they’re just not there today.”
There’s still strong demand overall. By Linde’s measurement, tech users now make up 31% of all of the space leased in San Francisco, and Airbnb, Twilio, Quantcast, Lyft, FitBit, and Uber have all expanded into spaces in the last quarter, although much of it was from the sublet markets. Plus, his company is continuing to lease out the floors to Salesforce’s new giant tower, which will open next year.
But the huge all-at-once office space grabs seem to be slowing down.
“So technology is still a vibrant part of the market, it’s still expanding, it’s not quite in the same manner that it was in 2014 and 2015,” Linde said.
The market is still red-hot to the south in Silicon Valley, though.
Silicon Valley “continues to be very active” thanks to public companies like Google and Apple. Plus, Facebook, NVIDIA, Broadcom, VMware, and Palo Alto Networks all continue to grow, Linde adds.
“… These are growing companies and what they are looking for is new modern efficient product to house their growth,” Linde said.