With the tech boom building momentum, Silicon Valley companies are on the hunt for space equal to nine shopping malls.

That was the highlight conclusion of a conference Tuesday organized by realty brokerage Cornish Carey Commercial Newmark Knight Frank. The gathering heard brokers present a robust outlook for the Bay Area economy and the region’s commercial real estate sector.

“We had a lot of tenant demand in 2011, and there is still more tenant demand coming,” said Phil Mahoney, an executive vice president with Cornish Carey.

At present, tenants are seeking a combined 9.6 million square feet of office and research space in Silicon Valley, estimated Cornish brokers, who update tenant demand estimates every three months.

Demand in early 2012 follows a spike at the end of 2011 that saw tenant demand reach 11.1 million square feet of office and research space, the highest level in the past five years.

When San Francisco and San Mateo County are added to Silicon Valley, estimated tenant demand is 15.6 million square feet of office and research space.

“This is a strong recovery,” Mahoney said. “The hiring rebound is continuing.”

About 9,400 openings for tech jobs are currently listed in the Bay Area, according to Cornish Carey.

The South Bay during 2011 posted a 3 percent gain in total payroll jobs, more than twice the hiring pace for the U.S. overall, which reported a 1.3 percent gain.

“The

Bay Area will continue to be an outlier for job growth,” said Erik Doyle, an executive managing director with Cornish Carey.

To be sure, tenant demand won’t translate at a 100 percent rate into new leases. Tenants often decide to remain where they are and renew their leases. Still, Mahoney estimates that in a decent economy — which appears to be the case in Silicon Valley and the San Francisco metro region — about two-thirds of the demand winds up as a new office space lease.

That could mean 6.4 million square feet of leases in coming months in Silicon Valley alone. And it might result in 10 million square feet of leasing activity in the South Bay, Peninsula and San Francisco markets before long.

The amount of prime office space available in Silicon Valley has been chopped nearly in half, due to the strong demand. At the end of 2010, the region had a 20.6 percent vacancy rate. One year later, Class A office vacancies had dwindled to 11.9 percent, Cornish Carey reported.

Brokers suggested that recent activity in Palo Alto, Cupertino, Menlo Park, Sunnyvale and Mountain View is poised to spread to nearby regions.

The hottest spots in the short term are South San Francisco, San Mateo County and North San Jose.

Further out, the next waves of expansion are expected to reach Milpitas, downtown San Jose, central San Francisco and Fremont.

The East Bay will also benefit from the upswing if companies can’t find space in their primary target areas of Silicon Valley and San Francisco, said Thomas Fehr, a senior vice president with Cornish Carey.

“There is not enough existing space to fill all that demand,” Fehr said. “Historically, when there has been an overflow, it has come to the East Bay. We expect that overflow again.”

Contact George Avalos at 925-977-8477. Follow him at twitter.com/george_avalos.

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Article source: http://www.mercurynews.com/real-estate/ci_19812931