Silicon Valley’s commercial real estate boom is expected to continue throughout 2013, according to a forecast released by a Bay Area commercial real estate firm.
Cornish & Carey Newmark Knight Frank recently presented its annual forecast in Santa Clara, and company CEO Charles Seufferlein is optimistic about this year’s prospects.
One of the indications that the market is booming is the 2.2 million sq ft South Bay office development. This is a speculative development and projects like these have not been seen in the area for “six, seven, eight years” according to Phil Mahoney, executive vice president with the real estate brokerage.
In 2012, rents for Class A office space rose five per cent. For research and development space, rents increased by 17 per cent.
Vacancy rates for offices and R&D buildings fell in the 12 month period from the end of 2011 to the end of 2012. In 2011 they were sitting at 14.6 per cent. By 2012, vacancy rates had dropped to 13.5 per cent.
In 2008, developers planned to construct 24 million sq ft of office space in Silicon Valley. The global financial crisis and recession meant that only two million sq ft actually made it to the market, according to Jim Beeger, a senior vice president with Colliers International.
There are some rapidly-growing companies looking to buy or rent space in the area in the near future. Along with big-name brands like Apple, Google, and Facebook, Twitter, Violin Memory, Survey Monkey, Nimble Storage and Marketo are all likely to be in the market for office space.
The forecast is not all rosy for Silicon Valley, though. Some experts have cautioned developers not to be too aggressive in their construction plans in case they wind up with a glut of buildings on their hands.
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