San Francisco is now No. 6 in an annual study where we’d perennially ranked No. 1, as we fall from the top five in terms of how much office space the tech industry is leasing here.
The last year’s commercial real estate scene in the city has been marked by tech companies suddenly deciding “Yeah, we don’t actually need that” and desperately scrambling for subletters for their SF office spaces — often in cases where companies made large, splashy office space deals pre-pandemic. This story keeps popping up anecdotally, but now that someone’s collected the data in a structured fashion, the fall from grace is greater than we’d realized.
Forbes reports on a CB Richard Ellis (CBRE) study that shows the SF Bay Area has fallen from No. 1 to No. 6 in terms of overall office space leased to tech companies, and the decline is just in the last in 12 months. (The study classifies us as the SF Bay Area, not just San Francisco.) The SF Bay Area has been No. 1 on this annual report every year since CB Richard Ellis started tracking the data in 2013.
Image: CB Richard Ellis
Yes, Elon, Austin passed San Francisco, though this data was collected before Austin went a week without power and electricity during the Texas winter storms. As you see in the chart above, Seattle has taken over the top tech office leasing spot, likely powered by the presence of Amazon. Manhattan took the No. 2 spot thanks to strong growth (growth is in green, renewed leases are in grey), Washington D.C. enjoyed very good renewals, and Atlanta took the No. 4 spot also based on growth in new leases.
A CBRE analyst says that firms aren’t necessarily leaving the towns who’ve fallen in the rankings. Instead, companies are purposefully opening more satellite offices in their non-headquarters cities, to attract a wider range of talent and hopefully cheaper labor. This “showed a commitment to move forward with those strategic plans despite the pandemic,” CBRE’s Tech Insights Center executive director Colin Yasukochi told Forbes.
Many SFist readers might say ‘Good riddance,’ and after all, you didn’t hear people walking around the Bay Area bragging “We’re No. 1 in office space leased to tech companies!” much since 2013. The drop in people working downtown has likely has a lot to do with the bargain rent prices, so for many of us there is an upside here. But it is scary to wonder what will happen to all those beloved downtown restaurants and retailers forced to close due to the lack of a bustling downtown workweek.
Whereas the real estate and tech companies will probably be fine no matter what, as evidenced by the recent record-shattering $1.08 billion sale of the Dropbox building in Mission Bay.
As is the case in cities across the rest of the Bay Area, the number of people renting in San Francisco tends to exceed the number of people who own their homes, with upwards of 55% of SF residents living in rental homes.
In recent years, the real estate market in San Francisco has been extremely desirable for renters, as well as a lucrative investment for property owners — especially with the city’s chronic shortage of housing. SF has consistently ranked atop the list of most expensive cities to live in the United States.
However, as pandemic fallout has seen unprecedented migration shifts and rent decline nationwide, SF property owners have been hit the hardest, with rents having decreased nearly 27% between early 2020 and early 2021.
Despite record lows and an historic decrease in rent for San Francisco landlords, market analysts are starting to see clear signs that these trends are beginning to plateau, if not even slightly reversing, and last month the rental website Zumper recorded the first rent increase in SF since the coronavirus pandemic erupted in April 2020.
Rob Warnock, an analyst with the renting platform Apartment List, believes the drop in San Francisco’s rental market has finally bottomed out as local rents begin to tick up marginally, telling SFGate, “Barring a new catastrophic phase of the pandemic, economic recovery and vaccine distribution should encourage prices to rise again, albeit slowly.”
While it may take years for the city to see the blistering rental demand that drove rents sky-high over the last decade, the median two-bedroom rent of 2,305 is still more than double the national average, and San Francisco is still the most expensive place to live in the country.
This mass exodus of renters from San Francisco has left owners and landlords with an accumulation of vacancies and not a lot to stand on. While many property owners struggle to find tenants and searches for ‘property management companies’ continue to soar Google, one company is establishing itself amongst its competitors to seize the opportunity to serve its community.
Founded in 2018 to fill a void created by ineffectual and substandard property management services, Ziprent has integrated technology and premium, hands-on customer service to provide the highest level of property monetization, maintenance and utilization at the lowest cost possible.
Ziprent’s mission is to make the process of renting a property easy, efficient, and straightforward for all parties, combining world-class customer service with superior technology to automate maintenance requests and rent collection.
For owners struggling to find renters, however, a lot of Ziprent’s value can be found when it comes to tenant placement. Ziprent’s platform is capable of listing a property, showing it, verifying the applicant, signing a lease, and coordinate security deposit collection, all within 24-48 hours.
Having partnered with more than 20 listing sites, such as Zillow and Trulia, Ziprent can make certain your property receives the proper exposure to potential qualified tenants, and their curated network of professional photographers guarantees extensive, high-quality photos will have your property looking stunning.
Ziprent’s on-demand showings via lockbox allow prospective tenants to come and see the property whenever they want, ensuring they see your property before any other that requires them to coordinate a time. Ziprent’s prospective tenants can select a two-hour window before being verified and sent a unique code to view the property, and time alone inside the space allows them to see it unrushed, offering a better experience for the potential renter.
This process ensures that regardless of how popular a property is, every tenant who wants to see a space is able to see it. With traditional, in-person showings, a property manager often stops showing a popular property because they don’t have the bandwidth to show it that many times.
Ziprent thoroughly vets all prospective tenants with both a background and a credit check, generates a tenant score, and shares the findings with their homeowners, maintaining a highly transparent level of application presentation.
Ziprent has quickly become one of the leading property management companies across the Bay Area, with over 850 units managed, 30,000+ on demand showings, and more than $30M in rent processed. And given their focus on highly responsive and transparent property management services, no one is able to bring more benefit to property owners with large portfolios and landlords looking for the luxury of a hands-off experience, especially those who own but are not local to SF.
Humans aren’t the only sentient beings on this planet that are at risk of contracting COVID-19; our closest living relatives, the world’s great apes, are especially prone to catching the novel disease from us.
As a result, the $3 million price point for homes is getting more competitive across the Bay Area. But what buyers get can look very different depending on the city or neighborhood. Two properties listed for just shy of $3 million — one in the Berkeley hills and another on a Palo Alto cul-de-sac — show us what luxury looks like in the Bay Area, one year into the pandemic.
A historic Tudor revival mansion, built by an heiress, with panoramic views of the Bay Area
Size: 3,866 square feet, on a 13,285-square foot lot
Price per square foot: $763
Amenities: Terraced back patio and porch, 3-car garage, legal and vacant in-law unit, en-suite bedrooms, balconies, backyard
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96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
This English country five-bedroom property was built in 1934 for Angela Wing Roth — an East Bay socialite — who had inherited a fortune from her father, a lime manufacturer. In the years since, it’s been a legacy property for multiple generations of notables in the Bay Area “glitterati” who have lived in the home, which is tucked away on a quiet, winding road near Grizzly Peak Boulevard.
The five-bedroom, four-and-a-half bathroom property sits on nearly one-third of an acre and is a sight to see. Golden Gate Sotheby’s International Realty listing agent Herman Chan says that since the home went on the market several days ago, he’s practically been living there to keep up with the interest — showings have been through the roof.
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
850 Richardson Court, Palo Alto
Golden Gate Sotheby’s International Realty
“It’s a triple whammy,” he said. “You get a flat yard, mega-mega panoramic views, and a vacant and legal in-law unit which is very valuable in Berkeley. Plus, the history and legacy is just such a good story.”
While the average price point for Berkeley is around $1.5 million, 2021 has seen everything go into overdrive, Chan said. With more buyers pouring in, it’s driving up the prices by more than 15% on what was already very limited inventory.
He said in Berkeley, in particular, he’s seeing a lot of buyers coming from Silicon Valley who — no longer bound by going into the office — want to get out of the South Bay.
“Before this year, Berkeley wasn’t really a $3 million city,” he said. Now, “it’s starting to cross more and more into that range.”
This historic Tudor mansion is not necessarily the typical $3 million home for Berkeley — many other homes with more average appearances and smaller footprints are listed in the area for similar price points.
But Chan says it’s priced taking into account the quirks of an old, highly unique home. It’s going to need work, and that work would likely come with a big price tag, because many of its original materials are hard to find and will have to be replaced carefully to keep the larger design of the home’s character in mind.
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
96 Parnassus Rd., Berkeley
Golden Gate Sotheby’s International Realty
“It’s going to be for someone who … will be the next steward of this beautiful property,” said Chan. “And we understand that there are certain drawbacks.”
A four-bedroom Eichler in a desirable Palo Alto neighborhood
Size: 1,867 square feet on a 6,995 square-foot lot
Price per square foot: $1,606
Amenities: New HVAC system, updated kitchen, solar panels, backyard, new flooring
This four-bedroom, two-bathroom home was built in 1956 and has an updated kitchen, formal dining room, floor-to-ceiling walls of glass and a two-car garage. The home has been popular out of the gate, with 11 showings on its first day of being on the market.
850 Richardson Court, Palo Alto
Golden Gate Sotheby’s International Realty
It’s an authentic “Eichler home,” featuring an open-plan living space, glass walls and many other midcentury modern architectural features.
Golden Gate Sotheby’s International Realty agent Dulcy Freeman, who listed the property, thinks it’s the location, on a quiet cul-de-sac near schools, community centers and parks, that really makes it stand out.
850 Richardson Court, Palo Alto
Golden Gate Sotheby’s International Realty
850 Richardson Court, Palo Alto
Golden Gate Sotheby’s International Realty
And while $3 million may sound like the kind of money that should get you a Tudor mansion wherever you go, in Palo Alto, that’s a standard price point for a larger single-family home these days.
“(For a) single-family home, you need to be ready to spend close to $3 million to get a piece of land with a home on it that is not a tear-down,” Freeman said. If your budget is under that amount and you’re wanting to be in Palo Alto, you’re likely looking at a townhome or one really close to the freeway, she said.
Freeman says the profile of the typical home buyer in Palo Alto has changed in the pandemic. She used to see people relocating from all over the world to work in Silicon Valley companies. Those buyers have disappeared.
850 Richardson Court, Palo Alto
Golden Gate Sotheby’s International Realty
850 Richardson Court, Palo Alto
Golden Gate Sotheby’s International Realty
But a new set of people have taken their place: from other parts of the Bay Area, especially those relocating from farther south looking to take advantage of the city’s well-known public school system.
“There’s a lot of shuffling of the deck within California,” she said. “What we’re seeing happening is the stayers — the people who love the state and want to be here,” she said.
That trend mirrors what a Chronicle analysis of U.S. Postal Service data found: the claims of a “California exodus” are mostly unfounded, and most people who moved out of San Francisco — or other Bay Area cities — moved to other ones nearby.
WALNUT CREEK (KPIX) — One way that buyers in this hot real estate market are making their offers stand out is by waiving contingencies. Realtors worry this will lead to lawsuits.
Abhinav and Moshika Guha first started looking at homes in November. They’ve placed seven offers and been outbid every time.
“In some cases, actually, we have decided not to offer because we know we’re going to lose out,” Abhinav Guha said.
They’re looking at every possible way to sweeten the deal.
”We’re 49ers season ticket holders so we’d include one game of your choice for the 2021 regular season. We just did that this morning,” Moshika Guha said.
In addition to tickets, they’re planning to offer over listing whenever possible, plus something they’ve never considered before — dropping all contingencies.
The most common types of home-buyer contingencies are:
Financing, meaning the sale only goes through once the buyer has been approved for a loan.
Inspection, where buyers can back out if an inspection reveals a problem they weren’t aware of or they can demand the seller make repairs.
Appraisal, meaning the home must appraise for equal or higher value than the offer.
Home sale, the buyer can stipulate the deal won’t go through until they sell their current home.
It’s now common practice to waive all of these.
“Our agents are basically asking the first question: just how uncomfortable do you want to get?” said Earl Rozran, vice president of experience at Sereno Real Estate.
Rozran’s main concern is the amount of money buyers stand to lose with these non-contingent offers should they need to back out.
“Their deposit is likely to go to the seller and 3 percent of a million dollars is $30,000 that walks out of your bank account,” Rozran said.
“There is no out. So you have to walk away from the deposit, you have to walk away from in essence, $50,000,” said Michael Delehanty, a real estate agent in Walnut Creek.
Delehanty says this market is unlike anything he’s seen in his career. He hates the idea of dropping contingencies.
“It puts your client at risk. My job is to protect my client’s interests, get them the house they want … I think agents are going to find themselves in court at some point,” Delehanty said.
Are the Guhas comfortable with this level of risk?
“We’ve just gotten over it a little bit,” Moshika Guha said. “Whatever it takes to get the home we want, this is just how the market is.”
According to the National Association of Realtors 76 percent of home sales in 2020 had contingencies attached. Nine percent of those fell through, mostly because many of those buyers lost work last year. Pre-pandemic home sale terminations were closer to 2 percent.
