Marcus & Millichap

Bay Area Local Office Report

Second Quarter 2019

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High-Growth Tech Firms Generating Tremendous Demand for Space Amid Resilient Economy

Job growth reaccelerating as firms rapidly expand. Even as unemployment remains near the lowest levels in over 20 years, technology and biotech firms, along with multiple vibrant startups, are continually hiring. These corporate giants have dramatically altered the landscape for premier office space, contracting vacancy rates well below the previous cycle lows recorded before the Great Recession. Builders have responded, lifting expected 2019 development to the highest point of the current cycle. However, net absorption has surged past supply growth, reaching nearly 9.3 million square feet in 2018. Some of the largest firms in the nation, including Facebook, Google, Merck and Amazon, have all signed considerable leases in the past year that will foster the next wave of growth. As conditions tighten further, rent growth will accelerate dramatically, particularly for the most modern, amenity-filled buildings.

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