Report: Office construction spurred by tech industry
- The technology industry has become a major driver of the booming office market in many metropolitan areas across the country, according to a Mortgage Professional America analysis of Cushman & Wakefield data.
- In the 87 markets that Cushman & Wakefield tracks, the company reported that the national office leasing rate rose 9.7% in the fourth quarter of 2017 to a total of 312 million square feet as compared with the fourth quarter of 2016. Those metros with the strongest tech company influence also have the lowest vacancy rates. For example, Midtown South in Manhattan had a 6.9% vacancy rate, followed by Seattle (7.3%), Charlotte, NC (8%) and Raleigh/Durham, NC (8.1%).
- However, in relatively smaller office markets like San Francisco and Seattle, where the tech industry is most prominent, the rate of leasing compared to inventory is high.
There is perhaps nowhere that exemplifies the tech-driven office market than Silicon Valley, where some of the biggest names in the industry have launched new projects to expand their office footprints.
LinkedIn plans on building a 1.1 million-square-foot headquarters in Mountain View, CA, around three existing, recently renovated buildings, according to the Silicon Valley Business Journal. The company wants to build three new six-story office buildings and two five-story parking garages as well, with the goal of accommodating up to 4,500 employees. LinkedIn is constructing on land that it swapped with Mountain View neighbor Google, a deal that resolved a property dispute between the two.
Google also is expanding its footprint in Mountain View with a new campus called Charleston East. The office complex will reach almost 600,000 square and will include features meant to draw in local residents, including a 2-acre public plaza, bike and pedestrian paths and ground-floor retail. The project has been through some design changes, primarily due to the smaller lot it was forced to work with after Mountain View city officials refused the company's request to use a 2 million-square-foot parcel near its existing Googleplex.
Meanwhile, Facebook revealed plans in July for additional office space at its Menlo Park, CA, headquarters. Dubbed Willow Campus, new construction will include 1.75 million square feet of Class A office space, 1,500 residences, a cultural and visitor center and 125,000 square feet of retail. The new campus will accommodate 8,700 employees, but Facebook has not yet said if some of the office space will be leased to third parties.
- Mortgage Professional America Tech is driving growth in office markets says Cushman & Wakefield
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