Mastering the metropolis through research and thought leadership.
Working Papers

The Bay Area Office Market and the Tech Slowdown

Working paper #373
Kenneth T. Rosen and Amanda L. Howard

The San Francisco and Silicon Valley real estate markets have experienced unparalleled growth in rents and values during the last five years as venture funding has escalated and Internet and high-tech firms have multiplied. A survey indicates that a substantial portion of recent demand has come from high-risk on-line and medium-risk high-tech companies; in excess of 50 percent of leases signed have involved web firms. Traditional off-line businesses are slowing their growth in the region, even planning to relocate because of high costs and difficulties in attracting and retaining employees. An infusion of billions of dollars of both venture and IPO capital, juxtaposed against nearly no new construction had created a rush-for-real-estate environment. Growth in rents will slow and potentially reverse direction as the tolerance for risk and lack of profits diminishes and new supply satiates demand. These conditions are not sustainable, and it appears that there will be a steady correction in which rents decline 15-20 percent and vacancy rates rise 6-7 percent in Silicon Valley and 7-8 percent in San Francisco by 2005.

Download full paper · 1MB PDF


In This Section
Explore Topics

1010 Affordable Housing Amazon Amenitization Architecture Artificial Intelligence Asia Australia automation Autonomous Vehicles bonds Borrowing Constraints Brexit California Canada Capital Business China Co-Working Environment coastal markets cold storage Colombia Commercial Brokerage Commercial Real Estate commissions Congestion consumer bias covid-19 CRE credit card market Credit Default Swaps Credit Insurance Credit Risk Transfers Culture Data Analytics data centers Data Collection Technology Debt Market Demand Demographics Density Development Discrete Choice disruption Diversity drones e-Commerce Economic Corridors economic policy economics education election studies Equity Funds Equity Market Ethnic Factors Europe Fannie Mae financial asset management Foreclosures Foreign Policy France Freddie Mac general equilibrium Global global economy Global Financial Crisis Globalization great depression Great Recession healthy buildings Hedonic hospitality Housing & Residential housing boom Housing Disease housing prices Housing Supply Identity Income Inequality India inflation Inter-generational mobility interest rates Investing jobs labor market Lagging Regions land use regulation Language life sciences Macroeconomics malls Market Pricing megacities Microeconomics Migration Minimum Payments Mixed-Use Mobility moral hazard mortgage insurance mortgage market Mortgage Rates Mortgages Multi-family Nation Building Non-Traditional Mortgages Office Market office sector pension funds Placed Based Policies Political Risk Price Discovery Private Equity Business public health public policy Public Schools real estate brokerage Real Estate Investment Real Estate Investment Trusts Recession Rental Retail Retirement reverse mortgages Risk Adjustment risk management risk-shifting robotics single family housing Slums Sorting South America Spatial Regions spillover effect stimulus package Sub-Prime Mortgages Sustainability Technology telecommunications trade transportation unemployment United States Urban Urbanization Warehouse welfare work from home

arrow_drop_up