By Robert Sammons, Regional Director – Northwest U.S. Research
It’s been a crazy couple of weeks. If you didn’t realize, Cushman & Wakefield has combined with DTZ to become – wait for it – the NEW Cushman & Wakefield. I’ve been getting to know a lot more of my new co-workers as we shifted offices around. It has been quite the hubbub but in a good way. You see our offices are of the new modern hip open floor plan here at 425 Market Street in beautiful downtown San Francisco. We’ve even won awards for our space! In any case, you make friends quickly in this environment (or enemies but that’s not been a problem!). And if nothing else, I know what it feels like to be in a techy work space. Now where’s that free lunch and open bar?!
So another brokerage house (he who shall not be named) came out with a story last week about asking rents in San Francisco pushing above those of New York (Manhattan) in the fourth quarter of 2015. Since this garnered a lot of buzz I thought I’d do a comparison of my own, using our fantastic C&W numbers, on what are arguably the two hottest markets in the U.S.
I certainly don’t see New York and San Francisco competing for the same tenants really. But they are rivals, if you will, for best – fanciest – most cosmopolitan – brightest – and any other superlative one can come up with. Of course, cost of living would rank way up there too!
• The overall average asking rent for Manhattan is now $71.58 per square foot (psf) versus San Francisco which is $69.69 psf (CBD figure). The Manhattan figure is up 5.7% in the past year while San Francisco jumped 10.5%.
• The Manhattan overall vacancy rate closed 2015 at 8.5% versus San Francisco’s 5.9%.
• Both markets have a significant amount of office product under construction given their level of inventory – 12.1 million square feet (msf) under way for Manhattan and 4.3 msf for San Francisco.
• And speaking of inventory – well there’s really not much of a contest here. San Francisco must concede with its 75.4 msf in 494 buildings versus the 394.7 msf in 1,384 buildings for Manhattan.
• One of the most interesting comparisons (at least to an economic nerd like me) is regarding jobs. Office using employment grew by 2.6% or 33,700 positions in New York City (all five boroughs) over the past year (November to November); in San Francisco office using employment exploded by 5.9% or 22,700 positions. For San Francisco, that figure does include San Mateo (as narrowly as the latest industry breakdowns get). But it is amazing that in San Francisco, a market with 30% of the total office jobs of Manhattan we added such a huge number in just twelve months. In fact, San Francisco is at a record high in total office jobs – 407,100.
Of course the question arises – can we keep it going, especially the job growth? As everyone knows that lives or has visited either market, it ain’t cheap. In fact, just a quick peak at any cost of living index shows New York and San Francisco WAY above the national average.
Over the next few weeks, I’ll do some further comparisons with our Northern California markets as well as other tech markets, particularly those in the Western U.S. Stay tuned.
This post is guest commentary from the latest weekly edition of our Bay Area Research Rant, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Robert Sammons is a Research Director for Cushman & Wakefield. Based in San Francisco, Robert’s principal roles include working closely with the C&W research teams across the Northwest – including Northern California, Portland and Denver. Robert is author of numerous documents that delve into a wide variety of real estate and economic trends. He has been a quoted source for all manner of real estate and related economic information in many widely known media outlets across the country. Robert has 29 years of real estate experience as both an appraiser and researcher. He earned a BBA in Real Estate from The University of Georgia and an MS in Real Estate from Georgia State University. Robert is a member of the Urban Land Institute.