S.F. rents hit $115 as vacancies under 2%.
SAN FRANCISCO -- Office rents in San Francisco have rocketed to a new record $115 per square foot.Pleasanton, Calif.-based Commerce One is paying that much for a 16,000-square-foot lease on the 13th floor of the Stewart tower at One Market Street, according to research by two local brokerage firms. That's a record, local brokers say.
Publicly traded Commerce One, which makes Internet software that connects buyers and sellers of business supplies, signed the lease with building-owner Equity Office Properties Trust in the past three months.
Commerce One has been on an expansion binge, but its One Market deal represents its first push into San Francisco.
Equity officials, through the company's public relations firm, declined to be interviewed, but Equity Chairman Sam Zell was heard crowing about the deal at a private gathering. A spokeswoman for Commerce One said no company executive was available to comment.
Other trophy properties have achieved top rates, including Bain Capital's lease of about 6,500 square feet at the Transamerica Pyramid for $110 per square foot.
Tim Mason, a senior director at Whitney Cressman Ltd., said rents above $100 per square foot are likely to continue.
"We still have a vacancy of 2 percent," Mason said. "There are tenants who will pay for prestige."
Tenants wanting smaller spaces in high-profile locations are usually more likely to pay sky-high rents, Mason pointed out. "If it's the one space that meets your requirement and it's $115 or $125 per square foot for 3,000 square feet, the (difference in) cost is almost irrelevant in terms of making a business statement."
In San Jose, the nation's most expensive office market, one deal on Sand Hill Road is known to have been negotiated at $247 per square foot. But some local brokers are skeptical that such rates are sustainable.
Bishop writes for the San Francisco Business Times, a sister publication.
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| Author: | Bishop, Amanda |
|---|---|
| Publication: | Black Enterprise |
| Article Type: | Brief Article |
| Geographic Code: | 1USA |
| Date: | Oct 27, 2000 |
| Words: | 313 |
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