Office-space: commercial rents begin to recover in the Bay Area

Things – by which we mean rent – are looking up in the Bay Area.

According to the Wall Street Journal, office space south of the City is beginning to fill up as gradual economic recovery makes growth and therefore relocation more feasible for many start-ups.  According to Bay Area real estate experts, the recovery is following a familiar pattern:

“Palo Alto always rebounds first, always demands the best rent, and then it just slides down from there—Mountain View, Sunnyvale, Santa Clara,” says David Buchholz, a San Jose-based senior vice president at brokerage Colliers International.

In Palo Alto, the forerunner in the Bay Area office rental recovery, vacancy is down 2.8% from last year.  San Jose hasn’t recuperated nearly so well, and parts of the city continue to struggle with vacancy rates of around 25%.  That’s staggering for the city that was once a major home-base of the dot-com boom.

The reason many dot-coms are relocating to Palo Alto is three-fold.  First, the neighbors: everyone wants to be near Google and Facebook.  Second, many progressive new companies take employee residence zip-codes into account when deciding on a new move, and Palo Alto happens to be a good mid-point for many.  Third, just about every Caltrain makes a stop at Palo Alto.

Those who are smart, of course, will snatch up a home in Palo Alto to match their glamorous Bay-Area job.

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