Office Space Costliest in San Francisco
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San Francisco office rents rose 7% to $76 a square foot annually in the second half of 2000, making it the most expensive market in North America, topping Silicon Valley and Manhattan, according to a commercial real estate report released Wednesday.
After rising an average of 11.7% in 2000, rents are growing more slowly across the U.S. as the economy slows and many of the Internet and technology-related companies that fueled the real estate market in recent years cut back on expansion plans.
“The outlook for sustained growth as reflected in office market occupancy, and in other key indicators, is marginal at best,” said the report from Washington-based Oncor International, a network of commercial property brokers.
Los Angeles ranked 19th on Oncor’s list at $25.27 per square foot. That was behind San Diego at $30.60 and Sacramento at $30.
In San Francisco, considered ground zero for the Internet industry, rent growth slowed after rising 35% in the first half of the year. Big landlords in the San Francisco area include Equity Office Properties Trust, Boston Properties Inc. and Spieker Properties Inc.
California’s Silicon Valley, at $70 a square foot, up 30% from June and more than double a year earlier, stood as the nation’s second most expensive market, according to Oncor.
Mission West Properties Inc. is among the largest developers in Silicon Valley, home to such high-tech companies as Cisco Systems Inc. and Intel Corp.
Manhattan ranked third at $57.51, up 16% from midyear and 31% from the end of 1999. Equity Office and Boston Properties have large holdings there.
Boston, the center of the mutual fund industry and the base for Fidelity Investments, stood in the No. 4 position, with average rents of $54 a square foot, while Seattle, home to airplane maker Boeing Co. and nearby Microsoft Corp., rounded out the top five at $45, Oncor said.
In a survey of Oncor’s brokers, 65% indicated they “anticipated significant blocks of ‘dot-com’ space returning to the market.”
Oncor tracked 116 buildings being built last year, adding 36.9 million square feet of space, in the downtowns of North American cities. While that is up 28% from 1999, it represents only a tenth of Manhattan’s office market.
Rounding out the 10 most expensive markets are Washington; Toronto; Chicago; West Palm Beach, Fla.; and San Diego.
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High-Rent Districts
Office rents across the U.S. continue to rise, the rate of growth is slowing. Los Angeles ranked 19th among the priciest office markets. Here are the top 10 in North America:
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San Francisco: $76.00 per square foot
Silicon Valley: $70.00
Manhattan: $57.51
Boston: $54.00
Seattle: $45.00
Washington: $38.00
Toronto: $35.00
Chicago: $32.20
West Palm Beach, Fla.: $31.79
San Diego: $30.60
Source: Oncor International
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