The ByteDance logo appears on a billboard next to the tech company’s offices at 1199 Coleman Avenue, part of the Coleman Highline complex north of San Jose.
SAN JOSE — The South and East Bay office markets have languished in the post-coronavirus era, but they still outperform San Francisco’s dying office sector on key benchmarks.
Comparing the performance of these markets before and after the pandemic, the South Bay and East Bay are either stronger or weaker than San Francisco, according to a report prepared by commercial real estate firm Avison Young. Hard.
Benchmarks for comparing the three regions include the average size of office leases, lease lengths, and concessions such as free rents that landlords make to tenants, Abison Young determined.
“Silicon Valley is a hub of technology, with decades of tenants, endurance of various economic cycles, and new innovations with each revival,” said Avison Young Innovation. said Dina Gouveia, Insights Regional Leader. “He will be a leader in getting out of this recession.”
According to Avison Young’s research, these are important barometers of the health of the three markets before and after the coronavirus outbreak.
— Rent free. Since the coronavirus outbreak, office property owners have offered an average of 2.4 months of free rent in Silicon Valley, 2.8 months in San Francisco and 3.8 months in the East Bay. Compared to pre-COVID-19 trends, the average number of rent-free months rose 26% in Silicon Valley, 62% in the East Bay, and surged 98% in San Francisco.
— Length of the lease. Since the COVID-19 pandemic, office building owners have signed leases for an average of 62.1 months in the East Bay, 58.4 months in San Francisco and 49.9 months in the South Bay. However, lease terms fell 7.5% in the East Bay and 4.6% in San Francisco. However, in the South Bay the average lease term has increased by 3.7%, indicating he is gaining strength.
— The size of the wreath. Since the start of the coronavirus pandemic, office property landlords have leased an average of 17,300 square feet in the South Bay, 14,700 square feet in the East Bay and 13,300 square feet in San Francisco. Average rentals surged 27% in the South Bay and 15% in the East Bay, but plunged 16% in San Francisco.
“Before the pandemic, the suburban markets (East Bay and South Bay) were not as hyperinflated as San Francisco,” said Abison Young executive Gouveia. As a result, she added, “we didn’t see much space reduction” in the South and East Bays compared to San Francisco.
As the coronavirus pandemic erupted, state and local government agencies imposed widespread business shutdowns across California and the Bay Area starting in March 2020 to combat the spread of the deadly bug.
These decisions forced employees out of offices and emptied buildings in the Bay Area, California, and around the world.
Technology companies, in particular, have aggressively enabled their employees to work remotely from home or the office.
Additionally, the tech industry has introduced a range of devices and services to enable non-tech employees to work from home.
As the economic impact of the coronavirus faded and the shutdowns ended, businesses returned to offices unevenly.
This stop-and-go return was driven by companies’ decisions to cut back on office space and employees’ reluctance to abandon their home workspaces and return to full-time corporate offices.
As a result, many companies have significantly curtailed their willingness to rent office buildings. As a result, the office vacancy rate across the Bay Area rose to a record high. In San Francisco, about a third of the city’s offices are empty.
“We expect Silicon Valley to rebound before San Francisco because we’re already seeing more people returning to offices, lower rents, and stabilization,” Gouveia said. She added that “the tide is starting to turn” in the South Bay.
