Jim Gardner
Managing Editor- San Francisco Business Times

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In a city of bearded hipsters and coder geeks in T-shirts and jeans, the sartorial world of commercial real estate brokers in downtown San Francisco is a throwback: Overwhelmingly male, dark suits, ties, as clean-cut and clean-shaven as season one of “Mad Men.”

But if you walked around downtown in November, you may have noticed brokers letting their facial-hair freak flags fly. On corners and building lobbies along California and Sansome streets were men with Fu Manchus, handlebars, horseshoes, even some Salvador Dalis.

San Francisco’s real estate community, led by John Cornuke of TIAA-CREF and David Churton of Jones Lang LaSalle, were national leaders in Movember, a mustache-growing event that raises awareness and funds for men’s health issues. This year Cornuke’s Team Nuclear raised $180,000, more than any other U.S. group.

This year Cornuke, who lost his father to cancer, favored a beefy Goose Gossage mustache. “I looked like a bad guy from the ‘Sons of Anarchy.’”

Churton, who lost both his parents to cancer, went for a slightly creepy “English squire” look.

Churton said next year Team Nuclear will try to get participation from other Bay Area brokerages. In the meantime, a bit of smack: “The brokers in Silicon Valley were so concerned about their pretty facial looks that they couldn’t bring themselves to do it. I think next year we will have a stronger showing from our younger, handsomer colleagues to the south,” he said.

Movember raised $120.5 million across the world, 82 percent of which goes to mens health programs.

“There is nothing more humbling than growing a mustache, and nothing feels better than shaving it off,” said Cornuke.

Jim Gardner oversees print and online news coverage of the vibrant Bay Area economy.

Article source: http://www.bizjournals.com/sanfrancisco/blog/2012/12/san-francisco-real-estate-brokers.html

“Who has a party in Palo Alto?” she asks the camera, in a dig at the suburban capital of Silicon Valley that helped make the two-minute comedy, “Shit Silicon Valley Says,” a Web hit. For many of the twenty-something engineers and other professionals who play a central role in the latest Internet boom, the question is purely rhetorical.

More than ever, technology entrepreneurs, and their investors and employees, are choosing the urban charms of San Francisco over the sprawl of neighbouring Silicon Valley. In the South of Market district, the nexus of the city’s tech industry, rents are soaring and latte lines are lengthening — conjuring memories of the dot-com bubble of the late 1990s.

Late last year, the city had 34,000 tech jobs, topping the high set at the peak of the dotcom boom in 2001, according to a Jones Lang LaSalle analysis of California Employment Development Department data. Twitter, Salesforce.com, Zynga, Yelp and other sizable Internet companies now call the city home.

Half or more of graduates of the tech incubator Y Combinator, a widely watched Silicon Valley institution, now move to San Francisco, founder Paul Graham said by email. Four years ago, he said, the city lacked the seriousness of purpose that infuses Silicon Valley. “I’m suspicious when startups choose SF,” he wrote at the time. “Things have changed,” he declared recently.

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“This is really where the centre of gravity is,” agreed Y Combinator graduate Dan Siroker. He worked for Google in Mountain View but started his own business, a company that lets businesses test versions of websites, called Optimizely, in San Francisco. And the profitable company just got a round of venture funding.
That’s not to say Silicon Valley, which extends south of the city to San Jose and includes towns such as Palo Alto, Menlo Park and Cupertino, is no longer central to the tech scene.

San Francisco captured 20% of all venture capital funding in the last quarter of 2011, its best showing ever, a report by PricewaterhouseCoopers and the National Venture Capital Association based on Thomson Reuters data noted. Silicon Valley accounted for a strong 27% of all VC investment in the same period.

The new generation of Internet companies has a more real-world, and arguably more urban, outlook. Customers of car service Uber, for instance, see a map of nearby cars on their smartphone app and can call one over in minutes.

Sahil Lavingia, who dropped out of college in Los Angeles to work at Pinterest in Palo Alto, is among those attracted by the city. Last year he left Pinterest and headed north, starting his own online payment service, Gumroad, which lets sellers tweet their wares and bears the design sense that is a hallmark of the San Francisco scene.

“I moved up here for two reasons. One is that Palo Alto is really boring,” the 19-year old chief executive officer said. “For me personally, it’s boring. And two, it’s boring for other people.” To be fair, he says, San Francisco parties are boring, because the people you really want to meet are home working. But the city is international, diverse — and has the people he wants to hire.

There are also plenty of reasons San Francisco is not a great place for business, starting with taxes. Among them is the city’s unusual 1.5% local payroll tax, which the business community views as a jobs killer.

Mayor Ed Lee, last year helped shield companies going public from the brunt of city taxes, and thus narrowly avoided losing Twitter to suburbia. Now he wants to swap a payroll tax for a revenue tax or other alternative.

“It’s all about compromise, and the good news is all of the constituencies are working together,” said Ron Conway, an angel investor known for seeding hundreds of earlystage companies.

Mr. Conway moved back to San Francisco from the Valley eight years ago for personal reasons. His business followed suit — now 60% of the roughly 200 companies his SVAngel portfolio holds are based in the city. Five year ago, three-quarters were in Silicon Valley.

But local progressives — the ultra-liberals who give the city its far-left reputation — have vociferously opposed the tax breaks, arguing that the payroll tax reflects the cost of city services and that newcomers should not be favoured over the people who give San Francisco its character.

The city turned more politically progressive after the “unchecked excesses” of the dot-com boom a decade ago, said Aaron Peskin, a former head of the Board of Supervisors, San Francisco’s city council. “I’m always amazed by human beings’ ability to conveniently repress recent history,” he said.

The last tech boom created jobs — and ill will, he noted. “When you are not taking care of people and families who have lived here for generations and made this the city that it is, it’s a little lopsided.”

Politics aside, high rents could eventually be problematic for businesses, too. Class B offices, including the industrial-looking lofts that tech startups love, currently go for around $43 a square foot and are climbing, Colliers International, a real estate broker said. The square-foot rate is double that in 2003, though still comfortably below the 2001 peak of $65.

Silicon Valley still has major advantages as a location, including wide-open tracts that can accommodate large corporate campuses. “As startups get beyond startup stage and start hiring people, they look to move out of San Francisco,” said Chuck Reed, mayor of Silicon Valley capital San Jose, where Cisco Systems Inc.’s campus stretches along several stops of the city’s lightrail system.

© Thomson Reuters 2012

Article source: http://business.financialpost.com/2012/06/11/startups-flock-to-san-francisco/

In September of 2011, he began as co-host on “Bay Area Game Day” on 95.7 FM, which is a college football radio that show that also features former Stanford center Mike McClaughlin and ex-Miami (FL) QB and 1992 Heisman winner Gino Torretta.

Olson had a prolific career at UCLA, where he is among school leaders in yards, completions and touchdowns. He was on the rosters of the NFL’s Carolina Panthers and San Francisco 49ers in 2007 after a short stint in NFL Europe.

Stay connected with LostLettermen.com via Facebook, Twitter, E-Mail RSS Follow @lostlettermen

After being cut by the 49ers in July of 2008, Olson tried his hand in the eventually dissolved United National Gridiron League before joining Jones Lang LaSalle. The look back at Olson is part of “UCLA Week” at Lost Lettermen. Drew Olson profile

Article source: http://www.lostlettermen.com/5-29-2012-drew-olson-ucla-whos-hot/

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Riverbed Technology will relocate
to floors two through six
at 680 Folsom St. with
a 10-year lease term.

(Mark Your Calendars: RealShare REAL ESTATE 2012, March 22^nd in Los Angeles).

SAN FRANCISCO-TMG Partners and financial partner Rockwood Capital LLC have signed a 167,788-square-foot lease to relocate Riverbed Technology to 680 Folsom St., a class A office building in San Francisco’s South of Market District near the Moscone Convention Center. Riverbed, currently at 199 Fremont St., will move into floors two through six at 680 Folsom St. with a 10-year lease term.

David Churton, headquarter practice leader and international director at Jones Lang LaSalle, represented the tenant. He points out that the Riverbed real estate team “took a very strategic approach to their future real estate requirements.” He explains that by being proactive, “they executed a headquarters strategy ahead of today’s constricted market and netted a superb block of quality space offering the flexibility to accommodate growth as well as excellent terms and prominent signage in what will be the finest redevelopment in San Francisco in the last decade.”

According to Mayor Ed Lee of San Francisco, “Riverbed’s long term commitment to keep their worldwide headquarters in San Francisco through 2024 demonstrates once again that we are the location of choice for high tech companies. With dynamic leaders like Riverbed’s Jerry Kennelly, we are making San Francisco the ‘Innovation Capitol of the World.’”

According to a recently tech report from JLL, San Francisco is the top high-tech industry growth market with the most impacted office market. Booming high-tech industry employment growth of more than 15 percent is creating strong demand for office space and has boosted rents 18.5 percent over the past 12 months. Stiff competition between tenants for the best quality space is moving market rents toward pre-recession highs in some buildings and causing high-tech firms that prefer South of Market Street to head north into the CBD. The excitement has drifted into the capital markets space and investors are snapping up properties at rates last seen in 2007. The resurgence in high-tech is electrifying not only San Francisco, but the entire Bay Area.

According to Michael Covarrubias, chairman and CEO of TMG Partners, “Riverbed is the ideal tenant not only for this space, but to complement the increasing tech growth in San Francisco’s SoMa area.” GlobeSt.com could not get further lease terms, like aggregate lease value, asking rent or taking rent by deadline. An unidentified source not involved in the deal says base rent is approximately $50 to $54 per square foot per annum.

According to Riverbed co-founder and CEO Kennelly, “we think the City is the right location to attract the best talent and provide a thriving environment for our current employees. Moving to a state of the art building in the heart of the City will be a great move for our company.”

With construction now underway, the 12-story mid-rise tower at 680 Folsom St. and adjacent three -story building at 50 Hawthorne St. will be fully renovated to Class A standards. The $87-million renovation, supported by TMG and set for completion in late 2013, calls for 680 Folsom St.’s existing 1960′s concrete exterior to be replaced with a clear glass curtain wall skin.

In addition, a two-story vertical addition and several small horizontal additions will also be added to the building, “increasing the gross building area by more than 100,000 square feet for a total of approximately 522,000 square feet,” according to a prepared statement.

All building systems will be replaced and a new public plaza will be built on the corner of Folsom and Third streets, where there eventually will be a new 15,000-square-foot retail or cultural building constructed, says the release. A new glass, steel and granite lobby will have 30-foot ceilings with floor-to-ceiling glass and a floating staircase. The property is pursuing LEED Gold certification.

Pacific Bell owned and occupied the headquarters facility until 2007. In October 2010, TMG recapitalized the development with a new equity partner in Rockwood Capital.

Categories:

West,
Office,
Leasing,
San Francisco

Natalie Dolce Natalie Dolce, editor of the West Coast region for GlobeSt.com and Real Estate Forum, is responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, Natalie was Northeast bureau chief, covering New York City for GlobeSt.com. Dolce?s background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats Arthur Frommer?s Budget Travel magazine, FashionLedge.com, Co-Ed magazine, and has also freelanced for a number of publications including MSNBC.com and Museums New York magazine. Contact Natalie Dolce.

Article source: http://www.globest.com/news/12_280/sanfrancisco/office/87M-Renovated-Building-Gets-First-167788-SF-Tenant-318417.html

Dropbox: The Inside Story Of Tech’s Hottest Startup

Victoria Barret
Forbes Staff

Will Facebook’s IPO Mark The Beginning Of The End?

Eric Savitz
Forbes Staff

Y Combinator Start-Ups: Guess Which Will Be Worth A Billion

Nicole Perlroth
Forbes Staff

Real estate can tell you a lot about people and markets.

Hundreds of Web-savvy startups have sprung up in San Francisco’s oldest buildings in the South of Market district (called “SOMA” for shorthand). So behind that sleek new Apple iPhone whatever-it-does application are a bunch of software developers crowded into a brick building that 100 years ago housed a meat warehouse, a button factory, or maybe a flophouse. Best of all (for those who enjoy irony), that same startup labored, even spent a few grand, to make sure their former warehouse looks nothing like: an office.

Original bricks are a must, according to Hugh Scott and Travis James who help run the technology practice at real estate firm Jones Lang LaSalle. “The funkier the better,” says Scott. This duo have spent the past decade landing homes for startups in the Bay area.

Exposed pipes are another top request. These used to be out of cheap necessity, in buildings where landlords were too stingy to shell out for even ceilings. But now tenants are willing to pay for what used to be done out of thrift. Scott and James have seen several tenants add $15 to $20 a square foot to their costs of moving in by asking that the ceilings be ripped out and the pipes cleaned to get that cheap chic look. For landlords, ceiling-free space is commanding a 10-20% premium.

One highly sought-after space was previously the storage closet for the nightclub below. What’s hipper than having your startup next to a night club? (Hint: the answer rhymes with “hip club”.)

Dogs are another a must-have accessory for today’s startups. This request tends to rule out any buildings owned by real estate investment trusts, which typically put “no pets” clauses in contracts.

Commercial rents in most cities are below 2007 levels. Meanwhile SOMA is commanding a hefty premium. Rents have jumped 35% just in the last two years, with some deals hovering around $50 per square foot — matching rates in Palo Alto’s most desired corridors, including the famous Sand Hill Road.

“Most spaces are seeing upwards of four offers,” says James, before smiling suddenly as a text message comes in and he adds: “We submitted an offer sheet for a place last Wednesday. Heard back yesterday, and now I’m hearing we’ve got just 24 hours to make a decision.” James sprints back and forth between downtown San Francisco and Palo Alto, alternatively finessing newly-picky landlords and networking with venture capitalists in the hopes meeting up and coming startups.

While rents here are soaring, they’re still not near the last bubble’s levels. That could mean this is less of a bubble, or simply reflect new buildings that have sprung up in SOMA. Scott and James aren’t sure. Another intriguing difference this time around: rents might be a leading indicator instead of lagging when it comes to the performance of tech’s all-encompassing NASDAQ stock index. Take a look (rent rates provided by Jones Lang LaSalle):

Some companies, notably Facebook, Dropbox, and Airbnb, have so far managed to avoid the headaches of going public while still raising IPO-size amounts, from venture capitalists. Social networking tool company Jive landed $120 million in its December IPO. Dropbox meanwhile scored twice that, $250 million, in its private funding round months earlier. If there is froth this time, it isn’t showing up in the NASDAQ.

Article source: http://www.forbes.com/sites/victoriabarret/2012/01/17/what-san-francisco-real-estate-tells-us-about-this-technology-boom/

At times, it seems like there has been steady economic growth in SoMa from the tech explosion of the late 1990s to today’s boom. While the newfound expansion, one based on the seemingly limitless possibilities of social networking, is re-inventing the way people communicate from China to the Carribbean, its beating heart lies in SoMa’s row after row of converted warehouses.

“The high-tech industry is a bright spot in an otherwise gray economic picture. High-tech jobs have grown nearly four times faster than the overall economy during the past 18 months,” a report by real estate services firm Jones Lang LaSalle noted.

Over that same period, tech job growth in San Francisco surged by 16.1 percent — the fastest of any area in the country, according to the report. That’s one and a half times the rate in Silicon Valley during the past year and a half — and growth has been the largest in SoMa. If tech is one of the most resilient parts of the U.S. economy, the strongest part of tech is in SoMa.

(SCROLL DOWN FOR PHOTOS)

These jobs are largely generated by eager young companies champing at the bit to become the next Google or Microsoft, and they all need somewhere to house their employees. This need has led to a hyperactive scramble for office space that seems shocking so soon after an irrationally exuberant real estate market catalyzed the biggest financial collapse since the Great Depression.

In October, the real estate firm Colliers International released a report that found 40 tech companies were looking for approximately two million square feet of office space in San Francisco, primarily in SoMa. Mayor Ed Lee noted that the space they were seeking to fill was “[the] equivalent of nearly four Transamerica Pyramids.”

For a variety of reasons, SoMa has developed into the northern, and most attractive, edge of Silicon Valley. Office spaces in the city’s former warehouse district look like what most tech firms think a tech office should look like — high ceilings, exposed brick walls and open floor plans that encourage collaboration. Not only do these offices fit the platonic ideal for “creative space,” they’re also in close proximity to the homes of the top talent the companies are hoping to attract.

Since its nadir in mid-2010, rents in the hot sections of SoMa have increased by 25 to 30 percent, according to Colin Yasukochi, director of operations at Jones Lang LaSalle, begging the question: Is this the next big bubble? And is it headed for an inevitable burst?

A DIFFERENT KIND OF BOOM

“The current boom is more San Francisco-centric than the one in the ’90s,” said Brady Barbier, associate managing director of Integra Realty Resources, the largest independent commercial real estate valuation and consulting firm in North America. “That one was more engineer-driven, and this one is more centered around social media and ad sales.”

The employees fueling this boom are generally more interested than their code-jockey predecessors in living and working in San Francisco’s vibrant metropolis instead of the South Bay’s sprawling landscape of sleepy suburbs and nondescript office parks.

“The firms that feel strongly about attracting top talent will swallow the pill and buy the expensive space in the city,” said Hessam Nadji, managing director at real estate investment services firm Marcus Millichap.

Once the number of tech firms in SoMa hit a critical mass, movement of more companies into the neighborhood became a self-fulfilling prophecy. “With tech firms, everyone is looking for synergy. They want to be close to each other and share ideas,” Barbier said.

Moving into SoMa’s tight cluster not only affords young companies the opportunity to exchange ideas and dream up collaboration while standing in line for those aforementioned artisanal grilled cheese sandwiches, but also makes poaching talent from competitors significantly easier. Convincing that hotshot project manager to jump ship is considerably easier when his or her new commute would be essentially the same 10-minute bike ride he or she is already making, instead of a 45-minute slog through bumper-to-bumper traffic.

THE FOG CITY’S ALLURE

When a company is looking for space in San Francisco, experts in the commercial real estate community say the company will almost always end up finding something in the city.

“It rarely happens that a company starts looking at SF, decides it’s too expensive and moves out to Walnut Creek,” Barbier said. “If you’re a company that wants to be in SF, chances are you’re going to make it happen.”

Colin Yasukochi of Jones Lang LaSalle agreed. “There are more companies coming into the city than San Francisco companies deciding to go somewhere else,” he said.

Twitter’s threat to leave San Francisco for the thriftier pastures of Brisbane represented a special case — a firm outgrowing its space, just on the cusp of having a strong enough gravitational pull (a la Google, Facebook or Salesforce) to attract top talent no matter where it’s located. For a company like Twitter, moving out of San Francisco carried both risk and reward — on one hand, it wouldn’t have to pay the city millions in payroll taxes on its impending IPO, but on the other hand, it might lose out on gobbling up the brilliant engineer who could otherwise design a “Twitter killer” for one of its competitors. Fortunately for Twitter co-founder Biz Stone and his colleagues, San Francisco officials — panicked over the possibility that Twitter’s departure could spark a mass exodus — handed the micro-blogging powerhouse a massive tax break as an incentive to remain downtown.

San Francisco isn’t Houston; it’s not the type of city where new construction is simple or cheap. As a result, the supply of available office space in SoMa is drying up fast. Vacancy rates along the trendy Second Street corridor are in the single digits.

“It’s beginning to be difficult to find 5,000 feet of creative space in SoMa,” said Tom Owens, founder of New Urban Properties. Hence, landlords of the properties that do become available are able to hike their rents to heretofore unimaginable levels with the confidence that, somewhere out there, a mobile gaming or online coupon company will be more than happy to pay whatever amount is asked.

Real estate firms see this and, since it’s supremely difficult to just create a new building from the ground up, they opt for the next best thing.

As a result, SoMa has seen a spike in the number of firms engaging in what’s called “value-added investing.” Investors take an already-existing property that is unfit for commercial use, renovate it, and then sell it within a few years to a larger firm looking to hold onto it for the longer term. It’s a riskier endeavor than simply renting out an established property and riding out the natural increase in rent that inevitably comes with an improving economy, but in an area eager for new development, it’s virtually the only way to expand the pool of available space.

A year ago, these “value-added investing” projects would have had a much more difficult time finding financing. Now there’s no shortage of backers. “There’s no credit crunch for projects that make sense,” Barbier said.

WILL THE BUBBLE BURST?

Despite surging demand in the market, the recent explosion in prices remains a source of unease.

“As an appraiser, any time you see excessive growth, it just makes you nervous,” said Mark Linne, executive vice president of the real estate valuation services company Appraisal World. “I don’t see rent growth of 25 percent being sustainable.”

Even though it’s unlikely that the current skyrocketing rent growth will continue indefinitely, that doesn’t mean a crash is inevitable, experts say. There’s the strong probability that rents will stabilize at a fairly high level and that many companies will continue to pay them. Others, priced out of this particular market, may move to different parts of the city, such as the Financial District, which is increasingly remodeling floors of its towering office buildings to more closely resemble SoMa’s creative spaces, or may follow Twitter’s example and relocate to the rapidly redeveloping mid-Market area.

If what’s happening in SoMa really is a bubble, the shifting of some development energy to other areas in the city may safely let out enough air for the market to stabilize. On the other hand, if what’s going on is actually just part of a larger social media bubble, then all bets are off.

“Conventional wisdom, and if you look back at history, is that [this market will be] cyclical,” Barbier said. “Combined with the current economic instability, I think this will be a few-year deal, and some of these guys will fall by the wayside, and pricing will come down. I mean, how many online coupon companies do you really need?”

Nadji agreed. “It’s unlikely that what we’re seeing is a development bubble, but it could be a pricing bubble,” he said. “The risk is heavier on the demand side than on the over-building side — meaning what would likely pop the bubble is a lot of these companies failing and not needing real estate.”

Online gaming giant Zynga is considered one of the drivers of the boom, with programs like FarmVille and Mafia Wars cluttering Facebook news feeds for years. Its move into its current Townsend Street headquarters, a building formerly mostly occupied by fellow gaming pioneer Sega, was one of the strongest initial signals of SoMa’s real estate resurgence. Yet Zynga’s long awaited IPO hit the market late last week with a resounding thud — opening at $10 a share, the stock never saw the expected flurry of activity many hoped would drive the price into the stratosphere. Instead, on investor fears of flat growth, the stock has remained just below its IPO price.

Zynga is one of the leading lights of the new tech boom, and a lack of enthusiasm toward its stock may be an ominous sign.

But this isn’t to imply that the newfound growth in the tech sector is necessarily a repeat of the heady days preceding the dot com crash. Today’s companies rest on much firmer footing than those involved in Pets.com’s infamous sock puppet spokesdog moving to the front of the unemployment line. “This current wave is far more grounded than the dot com boom,” Nadji said. “Companies need to prove themselves, and their revenue model, far earlier in the process in order get funding.”

Many real estate investors, still skittish from the sub-prime fiasco in the residential market, also exercise an excess of caution in their investments. “It’s rare for one bubble to follow another when talking about the same asset class,” said Anirban Basu, chief economist for Associated Builders and Contractors. “Once you’ve had one type of bubble burst, people are usually apprehensive about similar types of investments right afterward.”

Even so, there’s a very real possibility that the high cost of office space takes a toll on the fledgling companies driving the current boom. “In San Francisco, we always hear that we can justify these increases in rent because of our location. And I can buy that to a degree. But at the end of the day, there’s only so much a tenant can pay,” Linne said. “If you’re a start-up trying to scrape together money, paying an arm and a leg to rent in SoMa doesn’t make much sense.”

One of the keys to identifying any asset bubble before it bursts, according to Linne, is locating the market distortions that are artificially inflating prices. In this case, the distortion could very well be the idea that if you want to have a successful tech company that attracts top talent, you have to be in this one very small geographic area.

“It’s an ‘Emperor’s New Clothes’ phenomenon — everything is fine as long as everyone believes,” Linne said. “As long as people are reasonable and believe that these values are appropriate, it’s fine. But when tenants start to balk, that’s when the cracks start to appear.”

If the lines for grilled cheese are any indication, there is likely still more than enough of the necessary Kool-Aid to keep everything afloat.

At least for now.

Check out the slideshow below to see some of the hottest office spaces currently available in SoMa:

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Article source: http://www.huffingtonpost.com/2011/12/19/soma-real-estate-bubble_n_1158617.html

The bank’s San Francisco Bay region, now stretching from the Peninsula north to Oregon, will continue to be overseen by Michael Billeci

Mark Calvey
Senior Reporter – San Francisco Business Times

Email
 | Twitter: @MarkCalvey

Wells Fargo 
 

Wells Fargo
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shuffled its San Francisco Bay Area market leadership as it seeks to boost efficiencies while growing revenue.

The bank’s (NYSE: WFC) San Francisco Bay region, now stretching from the Peninsula north to Oregon, will continue to be overseen by Michael Billeci, while Jim Foley’s Greater Bay Area region now includes the South Bay in addition to the East Bay.

The new San Francisco Bay region includes 139 branches, about $29 billion in deposits and 2,400 community banking employees.

The San Francisco Bay region’s new leadership includes Tracy Curtis, president of the San Francisco market, who was most recently region president for the Mount Diablo market; Wendy Haller president for the Peninsula market; and Greg Morgan, North Coast Valley market, which includes Napa, Sonoma and Solano counties.

Other moves in the region include Maggie Mui becoming regional director of “diverse segments,” with a focus on the Asian community; Joanne Schultz, former San Francisco regional president, taking on the new role of director of consumer credit and small business banking strategy for the San Francisco Bay region; and Randy Reynoso, division manager for business banking in the San Francisco Bay region and for commercial real estate lending statewide.

Reynoso, who came to Wells through its 2007 purchase of Placer Sierra Bank, said he’s spent this year doubling the number of bankers in the region pursuing business customers with $2 million to $25 million in annual revenue. The region now has 30 bankers calling on prospective business customers in this market segment, including those in light manufacturing as well as doctors and dentists.

“We don’t own the market, but we want to,” Reynoso said. “There’s great opportunity here.”

Mark Calvey covers banking and finance for the San Francisco Business Times.

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Article source: http://www.bizjournals.com/sanfrancisco/news/2011/10/05/wells-fargo-san-francisco-market.html

“San Francisco jumped to the No. 1 position in the country” for office real estate performance, said Colin Yasukochi, vice president of research at Jones Lang LaSalle and author of one of the reports. “Technology companies are the underlying driving force in the San Francisco market. It’s recovering very quickly” from the economic downturn.

He shows the city’s average asking office rent at $40.06 per square foot, up from $33.71 a year ago.

Over the past four quarters, about 1.3 million square feet of space was absorbed by tenants, “the best four quarters since 2008, which was the peak of the market,” Yasukochi said. While the vacancy rate overall is still a relatively high 16.2 percent, in hot neighborhoods such as South of Market, it’s only 6.9 percent, he said.

Chris Macke, senior real estate strategist for research firm CoStar Group in Washington, agreed that San Francisco is bouncing back.

“You folks have seen steady rental-rate increases for effectively every quarter since early 2010, whereas nationally they’re still having rental-rate decreases,” he said. “In the second quarter, San Francisco had the largest rental-rate increases, going up 4.4 percent compared to the first quarter. That’s very, very strong, far better than anywhere else in the country.”

Part of the dynamic is that San Francisco tends to be volatile, as supply is constrained for the most sought-after, higher-quality “creative” spaces. “It’s a market that is prone to greater increases and decreases; it acts like a tightly wound rubber band,” Macke said.

Bright outlook

The San Francisco metropolitan area, which includes San Mateo County, was also on top for rent increases between the first and second quarter in a report from research firm Reis.

“I think the outlook for San Francisco is relatively bright,” said Ryan Severino, an economist at Reis. “We expect to see fairly robust rent growth there this year.” Both Oakland and San Jose metro areas also are benefiting from increased office demand, Reis found. It ranked San Jose fourth in the nation for rent increases and the East Bay ninth.

Tech firms increasingly are branching out from SoMa into downtown, previously the domain of more traditional companies.

‘The hustle and bustle’

“We like the hustle and bustle of the Financial District,” said Alex Mehr, co-founder and co-CEO of online dating site Zoosk Inc., which signed a lease in the second quarter for 21,391 square feet at 475 Sansome St. It already was subletting the space from Yahoo.

“Software companies prefer SoMa because they hire a lot of Java developers who live in the South Bay and so (being near) Caltrain is an advantage,” Mehr said. “But we’re a Web company and our developers live in San Francisco, so the Financial District is a much easier commute for them.”

Zoosk went from about 20 employees 18 months ago to almost 90 now. Mehr expects the staff to double annually, so the company will soon outgrow its current location. Rising rents don’t concern him too much.

In the heart of the city

“The advantage of being in the heart of San Francisco with quick access to BART and having all that action all around us outweighs any increase in prices,” he said.

Meade Boutwell, senior vice president with broker CB Richard Ellis, recently represented a downtown building that remodeled a 3,000-square-foot space specifically to lure tech tenants.

“The Mills Building at 220 Montgomery is one of the oldest buildings downtown, it’s a classic that survived the 1906 earthquake,” he said. “It’s class B space with traditional dropped ceilings. We tore out the ceilings, exposed the raw concrete, brick and piping, which made it very creative-looking. The tech tenants that all wanted SoMa in 2000 said they loved the feeling of the space; we had nine offers.” A tech company leased the space for $41 per square foot, a premium from its $35 asking price. Now the owner plans to do a similar rehab elsewhere in the building.

Executives at Starwood Property Trust, a real estate investment trust based in San Francisco, said they are bullish on the city.

“San Francisco has held up better than most markets,” said Chris Tokarski, managing director and chief credit officer. “In particular the tech growth is creating more pressure and space is leasing up quicker. You can say that about apartments, retail and office. It clearly is seeing growth on all fronts.”

E-mail Carolyn Said at csaid@sfchronicle.com.

This article appeared on page D – 1 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/07/08/BUUK1K7QG3.DTL&type=tech