By: Amber Schiada, Vice President, Director of Research
My favorite thing about visiting a new city is seeing its skyline for the first time. I have a deep interest in architectural design, and while I may not be an architect by training, I can certainly recognize a beautiful cityscape when I see one. I live in San Francisco, and love to escape the city, but every time I return and hit the curve on Interstate 280, as soon as the city skyline pops up I get really excited and know that I’m home!
But beyond the beauty and history inherent in each city skyline across the globe lie some interesting facts that speak to a city’s economy, industry, and people working within these iconic office buildings.
JLL just released its digital skyline; now anyone can take a peek at the skyline from their desk or mobile device and really understand how these buildings shape the market. How do these buildings perform relative to the rest of the market? Who owns these iconic properties? What is a trophy asset and how does it compare to non-trophy buildings?
In Northern California we have three distinct Skylines: San Francisco, Oakland and Sacramento. Each has a unique story and place in the greater regional landscape.
Demand throughout the city’s office market has been on a tear since 2010, dominated by tech companies. Do tech companies and their workforce, who tend to be younger, want to be in their father’s office building? That depends. Right now we’re tracking 2.2 million square feet of new Skyline supply under construction, and this follows 800,000 square feet of new Skyline supply completed last year.
Tech companies are largely attracted to Class B, creative space, but of the buildings already completed and those underway in the Skyline, all of them have been leased by tech powerhouses, including Linkedin, Salesforce and WeWork. So the answer is yes, but only if that building has the right amenities and is in the right location. Read more about San Francisco’s Skyline .
What could be better than setting up shop in a beautiful building with easy access to downtown San Francisco? The ability to do so at almost half the rate of San Francisco, and that’s what drives demand in Oakland’s Skyline.
We’ve begun to see some firms from San Francisco move into Oakland, but there hasn’t yet been a huge migration. It’s been mostly contained to cost-sensitive tenants like non-profits and smaller professional services firms. But the appeal is growing, and as more firms expand within the downtown area, the Oakland Skyline will become even tighter than it is today. Only one large block of 50,000 square feet or greater remains, and it probably won’t last much longer. Read more about Oakland’s Skyline here.
Government services employment is this town’s bread and butter, and after a lengthy recession and cutbacks in spending, the sector is finally coming back to life, boosted by strong growth in healthcare and professional services. The new Kings arena is adding much excitement to the market as well, and since the groundbreaking last year, tenant demand has picked up in this segment of the downtown submarket.
And where the tenants go, investors follow. An incredible 75 percent of all investment sales in 2014 were transacted during the fourth quarter last year, in synch with the arena’s groundbreaking. And even more impressively, total sales volume last year was $394 million, more than seven times higher than total sales volume closed in 2013. Read more about Sacramento’s Skyline here.
If you’d like visit other Skylines across North America, click here.