Published December 12, 2015 | By Bay Area Lab Spaces
The market for office space in Bay Area are seeing a spike in leasing activity in 2015, as tenants lease more space to house the growing Bay Area workforce.
As brought up in a recent article published on Dec. 1, 2014 from the SD Tribune, Offices set to go ‘Robust’ in 2015, By Roger Showley, many Bay Area businesses are becoming more profitable. “Consequently, their staff count has risen, on average, by 12 percent. This equates to companies outgrowing their current space and requiring more space. As Tenants leases expire, companies in Bay Area will soon be requiring larger space.'”
“January through October 2014 nationally, 679,000 office jobs were added, equating to a space need of 120-140 million square feet. But the actual leases will take down only a projected 65 million square feet this year. If job numbers hold up and leases start to be signed to accommodate more bodies, “net absorption will go from modest to robust in 2015.”
“For all its challenges, the office sector has slowly been tightening for four straight years,” he said, “and 2015 will be the first year where vacancy falls below its pre-recession average.”
Jobs are key, and they are growing in particular sectors, such as health care. Kaiser Permanente is expected to increase its office space to about 100,000 square feet in Mission Valley and Sharp Healthcare wants to build its own building of about 120,000 square feet in Rancho Bernardo.”
As for lab space, Bay Area’s fastest growing business sector, industrial building owners in Sorrento Valley are converting their obsolete industrial spaces into Class “A” lab space suitable for high end bio-tech users.
This year alone, rental rates are projected to increase by 7% – 10%, and continue to do so year-to-year.
In Bay Area, the fundamentals are all here, a highly educated employment base and a highly desirable business location, rental rates are bound to climb.