Walmart is subleasing 719,000 of office space in a four-building complex at Crossman Drive at Caribbean Drive in Sunnyvale, and OpenAi will be leasing 40,000 sf t 1455 and 1515 Third Street in San Francisco. Hooray!!

I have recently interviewed a number of office building experts and for suburban Class A office buildings in the Walnut Creek/Concord, Northern California region the cost to build a brand-new Class A office building is $500-700/square foot. This price includes land, architectural, permits, construction of the base building, parking structure, all the soft costs like…Read More→

  There is simply no way to sugar-coat what is happening in most parts of the United States in regard to office space and the office market. In just the past few days, Block announced it will cut 1,000 jobs, Microsoft placed 130,000 square feet of its 355 Market Street, San Francisco space on the…Read More→

89% defaulted ($672 million) and 11.1% ($83.7 million) were paid off during September 2023. None were extended or modified, according to Moody’s Analytics.  A new company, Arthroto, has a plan to make conversion of office to residential easier and cheaper by using factory-manufactured components that can be assembled floor by floor without disrupting other floor…Read More→

Contrary to reports of corporate executives mandating or begging or offering incentives for employees to return to the office, many will and many won’t. Either way we have far too much office space than is needed, even if more folks come into the office three days a week. As a case in point, last week…Read More→

A recent 2023 U.S. CEO Outlook survey by corporate-services firm KPMG poll showed that CEO confidence in having their employees return to the office almost doubled over the past year,, and while 45% believed that workers would continue in hybrid positions last year, in 2023 only 34% believe this. Last year 20% of CEOs thought corporate…Read More→

The SF Business Times  Oct. 2, 203 reported on a recent survey of 2,000 full0time employees by Owl Labs, The Hybrid Work Survey, which found “…69% of employees believe their company is requiring in-office work due simply to traditional work expectations. That disconnect is one of many factors that have limited enthusiasm for returning to…Read More→

The San Francisco Business Times reported September 28, 2023 that the CEO of Prologis, Hamid Moghadam, who runs the Billiion (yes, Billion!) square foot portfolio of industrial real estate said  “What are the big decisions we make?” he said. “What do we charge for a lease, how long of a lease do we sign ……Read More→

Major brokerage companies report San Francisco office vacancy now almost 34%. And including s[ace for space that isn’t vacant over 37%. AI is the big new wonder leasing office space in the City, but for every new AI lease another existing tenant is downsizing. As of this week  national office occupancy is up just a…Read More→

  The Bay Area News Group reported that 26% of residents work remotely, down from 36% in 2021. However, ‘despite the drop-off, there were still more than four times as many people working from home in 2022 as in ears leading up the pandemic, when just 6% of workers were mostly remote.’ Public transit ridership…Read More→

Austell Place, a 170,000 sf 100-year-old office building and was renovated in 2019 will now have 1,000 migrants living in the building. It had previously been converted from a 100-year old warehouse to a modern office building. It has floor-to-ceiling windows. I tried to find details of how this office-to-residential conversion will work but at…Read More→

“Back in April, Dropbox announced it was cutting 500 employees. In May, outplacement firm Challenger, Gray & Christmas let go of almost 4,000 people. And in July, the founder of an e-commerce startup said he laid off 90% of his support team. The common reason cited? You guessed it: artificial intelligence. Goldman Sachs economists have estimated that 300 million full-time…Read More→

Bisnow 8/23/23 Goldman Sachs is cracking down on making sure everyone comes back to the office full-time “though revenue-producing employees have for the most part returned full time, the publication reports that senior managers are frustrated by the reluctance of other staff, “constituting a significant chunk of its workforce,” to come back.   Google is…Read More→

  I was recently asked by a business reporter if, with suburban Class A office buildings like 2300 Clayton in Concord, California selling for as low as $110 a square foot, are we at the bottom of the cycle? This particular office building is one of my favorite, and back in 1985 I brought the…Read More→

The San Francisco Business Times August 29, 2023 reported that the latest Survey of Business Uncertainty (what a name!) from the Atlanta Federal Reserve Bank, University of Chicago and Stanford University, which surveys 500 business executives each month, ‘Executives predicted that about 72.6% of their employees would be working full-time onsite in 2028, down slightly…Read More→

There was a recent announcement of the largest office deal done in the past 12 months in the Oakland area. Delta Dental leased the third floor of 1333 Broadway (where 40 years ago I had my offices at Grubb & Ellis), and while it was great that this ‘largest’ deal was done, the size of…Read More→

According to the SF Business Times, ’San Francisco Sees Significant Jump in Return-To-Office Study’, with a 38% year-over-year increase in visits to office buildings in San Francisco. San Francisco foot traffic downtown remains down 56% from 2019. Ok, that was the good news.  On August 13, 2023   the U. S. Department of Health and Human…Read More→

  There are a new host of nontraded REITs being formed raising money to look for bargain commercial properties and swoop in when they think the price has dropped low enough to make sense. In a BisNow August , 2023 article “Nontraded REITs in aggregate have produced a total return over the last five years…Read More→

  On average, wrote Jerry Nickelsburg, an adjunct professor of economics at UCLA who helped run the survey, participants in both Northern and Southern California “expect both rental rates and occupancy rates to weaken in the coming year” and do not expect the sector to make a full recovery by 2026. San Francisco Business Times August…Read More→

  Today Google reduced the amount of funds budgeted for closing offices which might be a sign that perhaps the layoffs and worker reductions were coming to an end.  They spent $69 million in cutting space this last quarter, down from$565 million it spent the first quarter of 2023.  There was also a report out…Read More→

Lender Sues to Foreclose on WeWork’s San Francisco Tower ($240 mil loan on a 359,000 sf 20-story Class A office building): Blackstone Reports Income from eal Estate Sales Down 96% in Q2; Commercial Property Distress Hits $71B in Q2, Led By Office; Marketing Of Distressed Loop Building (1.4M sf in Chicago) Will Test Waters For…Read More→

Credits to Stephen Newbold, National Director of Office Research for Colliers. The national vacancy rate just went up to 16.4%, which is a record high. The suburban rate is 16.0% and CBD rate is 17.3%. There are 88 million square feet of new office buildings under construction, with 12 mil in New York City, 8.1…Read More→

Clara O’Brien, writing in Modern Farmer July 11, 2023 wrote a thought-provoking article about using vacant office space to grow fruits and vegetables. “In Calgary, Alberta (Canada) AgriPlay Ventures transformed part of underutilized office space in Calgary Tower Center into one of Canada’s largest indoor urban farms earlier this year…Currently, AgriPlay Farms is negotiating offers…Read More→

ResumeBuillder surveyed 1,500 full-time corporate workers in June, 2023 and found that: 85% of workers go to the office at least once a week 63% said going to the office improves productivity, top reason being more efficient teamwork 13% said productivity goes down in the office, and 25% of these say it’s a result of…Read More→

Cities and states around the country are offering incentives to remote workers to move, with West Virginia offering $12,000 in relocation cash paid over two years, a $2,500 outdoor recreation package and free coworking space.  According to a recent San Francisco Business Times article, 272 people have taken advantage of these incentives. “West Virginia notes…Read More→

Several of my friends and associates sent me the press release on July 6, 2023 about Apple purchasing a 161,000 square foot office building in Cupertino for $435/rsf. This is very positive news! Their ‘spaceship’ Apple Park in Cupertino can house 12,000 employees. Back in August, 2022 there was a corporate mandate that employees had…Read More→

I remember back when we had the savings & loan crisis. Back in the 1980’s between 30-50% of the nation’s savings & loans went out of business. Here in the East Bay around 25% of all our Class A office buildings went into foreclosure. I remember several instances where an investor purchased an office building…Read More→

Bisnow June 16,, 2023 reported that Brookfield “Dealing With Debt Issues At 8 Shopping Malls’,  and as one example, their Woodbridge Center mall in north Jersey lost one of it’s anchors, Sears, in 2020. The occupancy is at 63% and isn’t covering the debt. In 2014 the mall was worth $366 million but is now…Read More→

There was an announcement today about a 41,000 square foot office building in San Rafael, California being turned into 41 studio apartments ‘for those formerly unhoused’. The same Bisnow report also mentioned that Tishman Speyer just secured $150 million in financing to turn a Washington D.C. shopping mall into multifamily. They will demolish the 1970’s…Read More→

I like what San Francisco just did to make it easier to convert existing commercial buildings to housing. It also opened up the type of businesses allowed in Unio Square and the larger downtown area. In the San Francisco Business Times  June 13, 2023, “The city currently has an office vacancy rate of close to…Read More→

I was on a conference call this morning with senior SIOR office members from all around the country and while their office markets are not faring well, no where does it appear to be in the deep hole that is prevalent today in San Francisco. With a 30% overall vacancy rate and major users still…Read More→

I’ve been making predictions of the office market in my newsletter, now in its 43rd year of publication. My predictions have almost always come true, and these can be substantiated through my published back issues. There will be several varying factors that will be part of how our office space market stabilizes, and unfortunately with…Read More→

There area large group of folks, including most office building owners, landlord leasing agents, and older executive heads of thousands of companies, who still hold a belief that at some point in the not-to-distant future office workers will return to the office in force. This will be a combination of executive mandate, the recognition that…Read More→

  Bisnow May 23, 2023 headlined a scary article” ‘Persistent’ Remote Work Could Slash Office Values By 44%” and cites a recent study by New York University and Columbia University. “In an update released this month, the authors now project an average value drop of 43.9% from 2019 to 2029. In just a three-year period…Read More→

Tidewater Capital just received approval for a 420,000 sf Oakland CA office tower, so Hope Springs eternal with office developers despite the current and near-term market. At least one regional bank is requiring employees back to the office. AT&T is mandating managers return to the office, and Blackrock is requiring four-days a week in the…Read More→

Artificial intelligence may allow companies to dramatically reduce their workforce. Bisnow May 8, 2023, “IBM CEO Arvind Krishna told Bloomberg that back-office functions like HR would be paused in many cases because the roles can be undertaken by AI. He said the company employed about 26,000 people in noncustomer-facing roles, and about a third of…Read More→

The latest Colliers national office report shows sublease space at a record high, negative net absorption, and overall office vacancy in the United States now at 6.1%. “The gap between asking and effective rents remains significant. Tenant improvement allowances of $100 per square foot or more, accompanied by up to 10 to 18 months of…Read More→

Artificial intelligence in camera-based security may be dramatically changing crime deterrence.  Surveillance cameras are not just motion-detectors but with integrated AI algorithms they can detect intruders and appropriately set off lights, voice warnings, shrieking sirens, and trigger immediate reporting to guards or managers and allowing engagement directly with the intruder over the camera and speakers….Read More→

FacilityExecutive Magazine April 2023 had a sobering prescription for corporate real estate executives faced with excess office space, employees not expected to return to the office, a looming recession and in general no expectations that the vacant space will be occupied anytime soon. “To begin with everything must be on the table: Restack office space,…Read More→

Sobering articles recently that describe the huge discounting of older San Francisco office buildings. One example is 350 California St., 22 stories, 300,000 square feet and built in the 1970’s. In 2020 the value was estimated at $250 million, but now may sell for $60 million!  Another example is 550 California, once priced at $160…Read More→

In an article written by John McNellis, one of the top commercial real estate gurus, and published in the SF Business times April 28, 2023, John lays out the case that at least in San Francisco, office buildings may have lost 60% if their value, compared to just a few years ago before Covid taught…Read More→

Lyft recently mandated that all employees must work in the office Mondays, Wednesdays, and Thursdays, with Tuesdays recommended. They will also be allowed to work remotely one month each year, and those living too far from offices are not required to come in. Many call centers have remote workers, and some have begun to make…Read More→

  According to a recent study by The Instant Group and The Urban Land Institute,  82% of office landlords expect a slight to significant reduction in space utilization over the next five years. Bisnow April 24, 2023 “he survey also found a disconnect between landlords and tenants when it comes to office amenities. Landlords said…Read More→

  We are hearing about more office buildings rumored to be having financial issues. In some cases, there is a mortgage loan coming due and the owner is having trouble refinancing as recently many insurance lenders and banks have made office loans ‘off limits’. It may be that the vacancy of the building has increased…Read More→

Bisnow April 17, 2023 reported that while March 2022 President Biden said ‘in his State of the Union address that the vast majority of federal workers would soon return to the office…that didn’t happen last year, and the process has not always gone smoothly.” There have been federal agencies who mandated that all employees return…Read More→