BOSTON PROPERTIES NOTES CONCERN ON S.F. IN EARNINGS CALL
May 02, 2016
More cold water has been poured on the S.F. office market by Boston Properties president Doug Linde. He warned the demand for large block leases is thin in the city while prospects in Silicon Valley are more robust.
Linde commented on the state of the market in the company’s quarterly earnings call last week, according to Business Insider. He cited the lack of demand from large tenants who want more than 300k SF. Demand in previous years came from rapidly expanding unicorns such as Dropbox, Salesforce, Uber, Stripe, Slack and LinkedIn. With VC funding pulling back in 2016, startups aren’t looking to expand as quickly. The end result is a slowdown in volume and size of deals.
The outlook is better for Silicon Valley, where established, public companies are driving office space growth. Google, Apple and Facebook are among the main actors in this market.
While CBRE data from March showed a slowing market for large office leases (100k-plus SF), some hoped the trend could reverse. Linde’s comments indicate the slowdown will likely negatively impact full-year 2016 results. [BI]