Tech Companies Consuming Office Space

Mission Local map of local tech companies

Mission Local map of local tech companies

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Tech companies are taking over the city! Well kind of. They’re definitely taking over a large percentage of office space. A report from brokerage firm CBRE states that the tech sector had more than 60 percent of office space in the city last year.

What do these figures mean? The San Francisco Chronicle reports further:

During the first dot-com boom, office vacancy in the city shrunk to a minuscule two percent in 2000, according to the CBRE report. By 2003, after the bust, that figure swelled to 19 percent. San Francisco lost more than 70,000 jobs in the aftermath, according to California’s Employment Development Department.

There are arguments for why things could be more — or less — severe during the next tech downturn.

Part of the reason tech leases have grown by 40 percent is that far more companies are now concentrated within San Francisco’s borders, rather than more evenly spread throughout Silicon Valley. That means the city’s risk exposure could be proportionally larger.

The article states that most tech company leases are in SOMA, where they hold 58 percent of total office space in the neighborhood.

Here at Mission Local we made our own map of local tech spaces. You can check it out HERE.

Filed under: Mobile, Today's Mission

8 Comments

  1. community

    sigh. why do folks keep thinking that this round of tech development will end like the internet bubble of 2000? It is an entirely different beast today — a very diverse ecosystem of companies that are integrating technology with a wide range of industries — and are profitably doing so. In 1999, it was just a bunch of first-generation startups with no profits, all catering to advertising and capturing eyeballs. in otherwords, a monocrop of companies that could all fail together when the underlaying valuation model collapsed. This is not true today, so I seriously doubt that there will be a bursting bubble anytime in the near future. Individual companies will fail, and certain segments might collapse, but the tech industry is much broader and deeper now.

    • community

      which means that we should be building a lot more office space. Especially in the mission. I would love to see Mission Street supporting many more offices, it is an ideal location for that, with transit and commercial spaces already in place, plus lots of good lunchtime options

    • John

      So true. I think it is partly because they quite simply don’t understand the nuances. “Tech” is all one thing to them.

      And it is part an envy thing. Here is a booming successful building whose global nexus is in San Francisco, and they are not part of it. So they try and conjure up the notion that all success is a bubble to make themselves feel better.

  2. nutrisystem

    Tech is not a bubble.

    This time IS different If you have any sense at all, you will put all your money into tech stocks right now. Make the cash call! And if you have home equity, get it into tech stocks PRONTO, you cannot afford to miss out on this gravy train!

    I’m sick of the 1999 comparisons, this isn’t like Dogfood.com, this time it’s about surveillance, advertising, and highly addictive toys. These are key elements of our civilization, and are not going away any time soon.

    • John

      The thing with the tech boom is that it isn’t just the techies who are making bank. There are many other professions who are coining in serious scratch by servicing these businesses.

      It is said that each new tech job in SF is creating between 3 and 5 other other jobs. They may not all be high-paid jobs, although some definitely are. But it is deepening our economic growth and broadening our tax base.

      I agree with you that this is not a bubble. There is none of the mania of 1999 with the Nasdaq doubling in a year. Rather it is a slow, steady and sustainable rise in valuations.

  3. landline

    Some of these new social media darlings don’t have any revenue at all let alone profits. From the Chronicle article:

    “Snapchat lacks not just profit, but also revenue, yet it rejected a $3 billion offer from Facebook. Spotify and Dropbox are operating in tight-margin businesses with considerable competition and no evidence of profits, yet they or their investors place their worth at $4 billion and $8 billion, respectively.

    (Ken) Rosen said it’s fine to be profitless right up until the boom ends. But once the market turns, as many as 80 percent of today’s tech startups could vanish, eliminating thousand of jobs and emptying millions of square feet in the process. (If that sounds extreme, note that at least 80 percent of all new businesses fail.)

    ‘There is no question we are the epicenter of this business and when, not if, the downturn happens, we’ll have a sharper down cycle,’Rosen said. ‘I’d say we’re in the third, maybe fourth inning. We’ve probably got two or three more years of this.’”

    Ken Rosen understands the nuances.

    • John

      It’s probably fair to say that most start-ups fail to earn profits in their early years, regardless of whether they are in tech or not.

      But just one success can outweigh dozens of failures. MicroSoft, Cisco, Intel, Google, Apple, Oracle etc, all went from tiny start-ups to major global employers with tens of thousands of staff.

      That is simply the way the game is played and, for all the fallout of the 2000 crash, just look at us now. We shrugged it off and moved forward.

      Personally I find this whole dynamic, even though I do not work in tech, but rather profit from it in a second hand way. There are many cities across the nation that would kill for our “problems”.

    • community

      there is a lot more to “tech” than the social media startups. those tend to be the most obvious to outsiders, because they are consumer facing, but there is a LOT of activity going on that is focused on bringing efficiency and disruption to other established industries. There is where the real money is being made.

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