Momentum slowed dramatically in the second quarter for technology companies looking for office space – but, good news for San Diego – not here.
The region’s tech hubs – from downtown to Sorrento Valley and North County – posted sizable gains in activity, according to a new report from CBRE.
U.S. office space leased by tech companies in the second quarter amounted to more than 6.8 million square feet.
But that’s a 46% decline from last year’s quarterly average, and in line with the 44% drop in new office leases by all industries in the last quarter, which ended June 30.
Overall though, tech remains the most active in U.S. office leasing, according to CBRE, the commercial real estate services and investment firm. The industry accounted for 20.5% of square footage newly leased last quarter.
San Diego was one of only three markets, along with Atlanta and Washington D.C., to see an increase in
volume, with 365,687 sq. ft. of tech-office leases.
That’s a 58% gain from the 2019 quarterly average.
“We continue to be bullish about the future of the San Diego tech market, which had a strong second
quarter even amidst a global pandemic,” said Andy Ewald, first vice president in CBRE’s San Diego office.
“San Diego has incredible fundamentals to support the growth of tech-related companies in our market.”
The reverberations of the pandemic and recession on U.S. office leasing still are unfolding. For instance, the steepest rent declines so far have come in the downtowns of tech hubs San Francisco (down 5%) and Seattle (down 4%).
“The tech industry has proven resilient during the pandemic with many companies experiencing increasing demand for their products and services,” said Colin Yasukochi, executive director of CBRE’s Tech Insights Center in San Francisco. “Even so, many tech companies’ real-estate plans have been put on hold until more clarity emerges on business conditions and the economy. When tech companies return to the office market, they’ll likely find better leasing opportunities at lower costs.”
– Staff reports