Video Recap of Bisnow's San Francisco State of the Market

Jay Paul Company CIO Matt Lituchy is busy with the tallest mixed-use tower West of the Mississippi at 181 Fremont and expects to see more clustering in the market, like how Salesforce breaks up its presence between buildings. A tenant could have 50k SF in one building and 100k SF a few blocks away. His company just broke ground on 2M SF in Sunnyvale at Moffett Park. In addition, he expects to see more Silicon Valley companies expand and plant a flag in the city.

Allen Matkins partnerAnton Natsis, who moderated, asked panelists about plans to scoop up buildings in NoMa as SoMa options dry up. Years ago, when Matt’s 181 Fremont project was announced, there were naysayers because tech tenants weren’t interested in high-rises back then. That’s changed, and typical tech tenants will still flock to a location other techies are going, even if they have to go vertical; what they are looking for is proximity to transit and amenities. Anton asked panelists where they see themselves putting their money next.

Shorenstein CIO Charlie Malet says he’d love to own in NoMa for the right price. The center of the city has slowly shifted south, but he thinks there will still be demand for Class-A, rectangle boxes in NoMa. Mid-Market, where Charlie’s prized Twitter-leased property stands, is not that big and basically leased up. Shorenstein succeeded in that area due to availability hitting the market at the right time. He says it’s a great residential story in Mid-Market that still has room to grow. S.F. stands apart from other hot real estate markets because it enjoys a combo of tech, VC, and quality of life.

Jobs build buildings, says CBRE managing director Russell Ingrum, and S.F. and Houston sit at the top when it comes to job creation. Tech represents half the leasing velocity in the market, which means other sectors are gaining ground. Many leases are expansions as tenants come up for renewal. There's some 4M SF of net absorption expected over the next three years, so new developments can keep competition-driven spikes at bay.