NAIOP SFBA hosted its second weekly ZOOM-IN webinar on Thursday April 16th, Market Update: San Francisco Office Leasing. The event drew a virtual crowd of close to 120 and featured a panel discussion moderated by Kathryn Collins, Partner, Harvest Properties. Panelists included Mark Anderson, Vice Chairman, Cushman & Wakefield, Conor Famulener, Executive Vice President, CBRE and Chris Roeder, Managing Director, Brokerage, JLL.
In addition to gaining insights into the rapidly changing San Francisco office leasing market, the live webinar featured bits of levity, including catching up on what each panelist has been up to since shelter-in-place – one is hunkered down in Florida with the in-laws, another is trying to get through his golf shirt collection, while the other is expanding his expertise in childhood therapy, cooking, and Schitts’ Creek – Collins also had her own “BBC Dad” moment when her young son appeared on camera!
NAIOP SFBA Members Click here to view the program in its entirety and find a brief overview of key discussion points below:
1. Current State of Market Activity
- West Coast still active (Seattle strongest – East Coast dead)
- Bay Area still active
- Many deals on hold, yet to see many cancellations
- Virtual tours starting to pick up
2. Sublease Market
- Rising unemployment will increase inventory
- Continuation of lift and shift – more large spaces will become available
- Too soon to predict how low rates will go
3. Direct Market
- Potential shift in tenant requirements (building type, location, density)
- Too early to predict rate movement
- Vacancy north of 10% could trigger decline
4. What Tenants are Focused On?
- Rethinking workplace strategy
- Shift of employees working fulltime at home
- Does their fundamental business plan still work?
- Getting employees back to work
o Staggered schedules
o Temperature checks
o Adjust density
5. What Can Landlords do to Improve Building Operations?
- Parking – people will be scared of public transit
- Cleaning and disinfecting
- Virtual tours
- Smart tech
- Elevator protocols
- Touchless controls
6. Post COVID Tenant Demand
- Focus on health and wellness
o Increase density standards (Microsoft rumored going from 175 to 300)
o Upgraded MEP systems
- Large blocks will be most sought after
- Preference for new product and trophies continues
- Full building users – tenants will pay to have control
7. New Product
- SF still has fundamentals
- Companies will over commit to achieve density
- “Flight to quality”
8. Flexible Office Space
- Knotel and WeWork- massive layoffs, shedding space
- Traditional co-working challenged
- Enterprise solution more attractive
- Landlords will provide themselves
- Tenants driven to save = compete with sublease space
9. Advice for Young Professionals
- Roeder: Get up early and out hustle your competitors, overcommunicate
- Famulener: Lean on mentors, share best practices, hand hold clients
- Anderson: Be ethical, your reputation sticks with you. Reach out to more senior colleagues to make up for what you miss being in the office.
NAIOP SFBA members can watch a recording of the webinar here.