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2Q10
FORECAST
This year’s leasing has been dominated by Manhattan’s leading industries. Financial $50 22%
Office
servicesspace
firmsvacancy
(36.4%)inand
Sanlegal
Francisco
serviceswill remain
firms high accounted
(11.7%) as long as the
for labor
nearlymarket
one of stays
everyflat. $45
20%
Despite
two squareweakened job growth,
feet leased tenantthrough
from January activity June.
is improving.
In April,Significant lease rollovers
Lehman Brothers Holdings, $40
18%
16%
scheduled
Inc. signedfor this year and
Manhattan’s 2011new
largest havelease
beeninthe driving
2007, force behind
a 414,575-sf a large
sublease portion
at 1271 of overall
Avenue of
psf/ yr
$35 14%
activity in the market.
the Americas. Renewalofactivity
The frequency continues
transactions withto growrents
taking but some tenants
starting at or relocate to take
above $125.00 12%
$30
advantage
continued of to more
climb:suitable
18 suchspace, depressed
transactions asking rents
year-to-date and21
versus concessions.
signed in the Lease
fourconcessions,
previous 10%
in the combined.
years form of free rent, beneficial occupancy and tenant improvement allowances, continue $25
8%
to play a significant role in the transactions taking place. Tenants still have the upper hand as $20 6%
2Q06 2Q07 2Q08 2Q09 2Q10
landlords look to maintain occupancy, maintain balance sheets and make loan payments.
SAN FRANCISCO OFFICE REPORT 2Q10 1
SAN FRANCISCO OFFICE REPORT 2Q10
MARKET/SUBMARKET STATISTICS
OVERALL DIRECT YTD YT D YTD YTD DIRECT WTD . AVG.
N O. OF VACANCY VACANCY LEASING UNDER CONSTRUCTION DIRECT OVERALL CLASS A GROSS
MARKET/ SUBMARKET INVENTORY BLDGS. RAT E RATE AC TIVITY CONSTRU CTION C OMPLETION S ABSORPT ION ABSORPTION RENTAL RATE*
NOMA Financial District 25,995,252 112 15.3% 12.9% 929,075 0 0 (386,178) (121,877) $37.33
SOMA Financial District 23,162,801 100 10.7% 9.4% 555,750 0 0 (320,579) (321,277) $38.78
CBD Total 49,158,053 212 13.1% 11.3% 1,484,825 0 0 (706,757) (443,154) $37.94
Jackson Square 1,369,168 24 17.6% 17.6% 57,826 0 0 2,486 2,486 $31.61
North Waterfront 2,411,354 32 15.9% 14.0% 138,254 0 0 41,490 20,668 $29.92
South Beach/Rincon Hill 2,412,962 29 17.3% 13.1% 137,026 0 0 (48,926) (45,706) $31.52
San Francisco S. of Market 5,715,514 46 26.2% 23.5% 174,261 0 0 1,953 4,028 $35.73
West of Kearny 703,735 9 8.3% 7.4% 3,287 0 0 2,725 2,725 $26.14
The Presidio 995,955 7 22.8% 20.0% 14,117 0 0 (154,377) 6,420 N/A
Union Square 4,217,942 60 11.4% 10.5% 156,331 0 0 67,989 76,113 N/A
Van Ness Corridor 4,486,156 35 21.1% 21.1% 22,493 0 0 (617,332) (617,332) $26.02
Potrero Hill/Inner Mission 1,893,398 23 21.8% 21.0% 101,855 0 0 (52,246) (47,393) $24.03
Mission Bay 1,006,272 4 48.1% 48.1% 0 0 0 0 0 N/A
Non-CBD Total 25,212,456 269 20.4% 18.9% 805,450 0 0 (756,238) (597,991) $28.59
SAN FRANCISCO TOTAL 74,370,509 481 15.6% 13.9% 2,290,275 0 0 (1,462,995) (1,041,145) $36.85
* Rental rates reflect $psf/year
MARKET HIGHLIGHTS
SIGNIFICANT 2Q10 NEW LEASE TRANSACTIONS
BUILDING SUBM ARKET TENANT SQUARE F EET BLDG C LASS