[HN Gopher] One in five Silicon Valley office buildings is vacant
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One in five Silicon Valley office buildings is vacant
Author : anigbrowl
Score : 42 points
Date : 2023-10-06 17:35 UTC (5 hours ago)
(HTM) web link (sfstandard.com)
(TXT) w3m dump (sfstandard.com)
| kalupa wrote:
| while this sucks for commercial property owners and the plethora
| of businesses that have supported the office work life for so
| long, time for them all to adapt and move on.
|
| SF is a boom/bust town, they're used to it, right? </s>
| jbverschoor wrote:
| SF or the whole bay?
| MrFoof wrote:
| Two Class B office buildings totaling ~150,000 ft2 in Boston just
| sold for $4.1M, when in 2016 they had previously sold for $16M
| https://archive.ph/AADPP.
|
| Here's the location: https://maps.app.goo.gl/ezkNUEPAVCJJ2rps8
| Things to note:
|
| * Within HALF A BLOCK of Boston Common
|
| * Within one-to-two short blocks of THREE subway stations serving
| THREE of the four subway lines
|
| * A Dunkin' Donuts 30 seconds away on foot, with multiple other
| cafes within a block.
|
| So prime transit location for workers. However the occupancy of
| the building has been crud for a long while (hence being sold),
| and hence why it went for nearly 75% off in the auction.
|
| And before anyone goes, "but what about the condition", take a
| look for yourself (https://i.imgur.com/rubVC88.jpg not all photos
| are the building). It's certainly not bad! No, it's not like a
| top-end Class A skyscraper such as 101 Huntington or 200
| Clarendon _(or newer stuff I 've not been in)_, but it's far from
| garbage! It certainly appears to be Class B space, and I say that
| as someone who _actually built out offices (as an employee, not
| an architect)_ for two companies about 10-15 years ago!
|
| The sale price works out to just $27.33/ft2. The monthly rent for
| Class B in 2022 was $32-38/ft2. So these just sold for the (EDIT)
| one year's rent of _Class C_ space. Yikes! Someone took _a bath_!
|
| ------
|
| There's no office demand. _Period._ Boston has no shortage of
| vacant office space right now either, and even the buyers of
| these two buildings are looking to repurpose them.
| quickthrowman wrote:
| > The monthly rent for Class B in 2022 was $32-38/ft2.
|
| That is not the monthly lease rate. All commercial property
| lease rates are quoted as dollars per square foot per year.
| MrFoof wrote:
| You are correct, my bad! Updated my post.
| quickthrowman wrote:
| Based on this tenant space listing [0] the building appears
| to have around 40k sq ft of leasable space. That works out
| to around 3.25 years of rent assuming 40k sq ft leasable at
| $32/sq ft.
|
| It's definitely not a good sign for commercial office
| space, that's for sure.
|
| US 30 year bonds are yielding 5%, that's much more
| attractive than a half-leased Class B office tower with an
| 8% mortgage right now.
|
| [0] https://bradvisors.com/wp-
| content/uploads/2019/04/33-41WestS...
|
| P.S. Sorry about the nitpicking :)
| mistrial9 wrote:
| great market info and very relevant comp to SF in so many ways;
| especially enjoy the implication that yes, long-term capital
| holders do in fact measure value by "the distance to the donut
| shop."
| MrFoof wrote:
| Dunks is a New England institution with a pretty fanatical
| following, at least for the coffee.
|
| To put things into perspective, until very recently, the Back
| Bay subway and commuter rail station had TWO Dunkin' Donuts
| inside the station, _within ~100 feet of each other_ , one on
| each side of the platform _(on the floor above the
| platforms)_. One was smaller than the other, but you could
| literally hit someone in the other line with a thrown donut
| they were that close.
| astrange wrote:
| SF also used to have two Starbucks across the street from
| each other near Moscone.
|
| But really, isn't that just one shop that happens to have a
| railway running through it?
| MrFoof wrote:
| They were actually owned by different franchisees!
|
| The spaces were significantly different as well. The one
| that shut down was so small it couldn't even physically
| accommodate the equipment to make the sandwiches!
| extragood wrote:
| I'm sure there are valid reasons for doing that, but
| whenever I see multiple franchises within spitting
| distance of one another, I can't help but be reminded of
| Gob Bluth's "market research" for a 2nd banana stand in
| Arrested Development:
|
| > Did you know that more frozen bananas are sold right
| here on this boardwalk than anywhere in the OC?
|
| And of course he goes on to cannibalize the family's
| original business.
| dmitrygr wrote:
| Good! We're 20% there!
| shortrounddev2 wrote:
| Good lol
| juunpp wrote:
| In SF you will find entire floors vacant while the homeless camp
| outside.
| paulddraper wrote:
| Why when I go to the actual report does it say the vacancy rate
| is 6.7%? [1]
|
| [1] https://www.colliers.com/download-
| article?itemId=4056e99d-17...
| datadrivenangel wrote:
| "The office market measured negative 1.8 million square feet in
| net absorption, with the vacancy rate increasing 200 basis
| points year-over-year to 12.5% while average asking rents
| recorded $5.37 per square foot Full Service."
|
| Looks like something around the definition of availability
| versus vacancy rate?
|
| If I'm trying to sublease my officespace, is it vacant if i'm
| still paying my lease?
| paulddraper wrote:
| But I still don't know where 20% comes from.......
| TiredGuy wrote:
| They got that from the availability rate, not the vacancy
| rate. You can see the percentages they list in the article
| for each town correspond roughly to the "R&D Availability
| Rates Select Silicon Valley Cities" figure on Page 5
| huytersd wrote:
| The availability rate sounds like it should be some
| fraction of the vacancy rate, not the other way around.
| marcinzm wrote:
| But the overall rate across all cities is not 20% but
| much lower. So the title is inaccurate even if it's true
| in select cities.
| leetcodesucks wrote:
| [dead]
| welon wrote:
| [dead]
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