Significant Shifts In The San Francisco & Global Market
In the past years office rental rates and trends have been fairly straightforward. Obviously, not now!
We are a boutique property owner in the Mission District of San Francisco. We have pulled together the 2021 Top 5 Rental Trends for Commercial Office Space from our clients, national property leasing partners, and our own tenants in the San Francisco VC and Startup Community.
Not surprisingly, we experienced a significant drop in office space demand early in 2020. However, the demand for certain office spaces, as of September 2020, began to rebound.
CEO’s “Caught In The Headlights”
As if being a CEO/COO/CFO was not challenging enough before 2020! These are the questions we are now hearing from our tenants in the C-Suite:
Do I take the risk and commit to office space or hold off?
How do I deal with my new responsibility for their health?
If I do hold off, will things be different in a few months, or will we still be in the same situation?
How do I balance my employees varied risk level tolerance against my need to drive results?
From CEO’s: 2021 Commercial Office Space Roadblocks & Rebounds
Before we talk about the market trends, we need to first recognize the roadblocks and drivers in our industry.
Top Factors Slowing 2021 Office Space Rental
With 39% of employees reporting high Levels of COVID Anxiety, many CEO’s are leaning towards simply continuing remote working.
The level of known and unknown COVID risk factors within traditional office spaces. These risk factors are especially pronounced in larger traditional office spaces.
The third factor was a bit of a surprise to us! Some CEO’s are telling us that their board is not going to penalize them for “playing it safe”. But they might get reprimanded if they commit to an office space and COVID gets worse.
Top Factors Rebounding 2021 Office Space Rental:
Employees are struggling at home. Most CEOs are impressed how well their employees are coping and contributing. But they are starting to see signs of burnout and are not experiencing the same level of creative excellence from their key people.
Corporate cultural bonds are slipping, creating concerns of employee retention for remote workers.
CEOs are concerned that remote workers are simply not as emotionally connected to the company and therefore will not be as connected to their teams, the end-user and the customer.
2021 Top 5 Trends for Commercial Office Space
#1: ONE TO THREE STORY OFFICE BUILDINGS ~ ROCKETING DEMAND
CEOs are looking to create a bridge between the home and office for their staff. Spaces must provide a high-level of personal safety while remain relaxing and inviting. Just as 2020 turned motels and small hotels into hospitality stars, so are low rise office buildings offering safety and security.
Top Building Layout Requests:
Private offices or open concept floor plans with ample personal space.
Private or multiple entries and doors.
Parking options that do not require elevator
#2: WALK-ABLE & UNIQUE NEIGHBORHOODS
CEO’s are asking for features more traditionally requested in the retail and housing market. This surprised even us!
Top Location Requests:
“I want my people to have interesting spots in the area to walk to and get some fresh air.”
“We are looking for more diversity, we are looking for a funky but safe neighborhood to integrate with.”
“Parking available outside or nearby, and streets bicycle friendly.”
#3: NOT THE SAME OLD OFFICE SPACE
We are no stranger, especially in San Francisco, to leaders who use their office space as a tool, extension, and promotion of their brand.
With all the office space available today, design and impact is even more crucial. The ‘Outstanding’, ‘Inspirational’ and ‘Fulfilling’ spaces will be chosen. 'Fine', 'Good' and 'OK' will not.
New office spaces must elevate employees out of stress and into flow. Of course, a space alone cannot do this. But Innovative players understand the power of the perfect space.
Top Office Must Have Features:
More inviting than working from home
An environment that Inspire and elevates.
Great light - always highly correlated to joy.
Must promote communication and connection -company culture is currently under pressure at most companies.
#4: PERSONAL SPACE AND PERSONAL AIR
Workers must feel safe and more importantly that they are being put first!
Top Personal Air Supply Requests:
Windows that open. Obviously, we are all looking to reduce our exposure to recycled air.
Private air circulation private to each office suite
New air systems and strong maintenance programs.
Top 3 Air Supply Violations (in order of impact):
Forced to use elevators.
Human traffic pinch points.
Non-staff/work pod foot traffic
#5: MANY TENANTS ARE LOVING STAIRS
We are seeing more advanced automation systems from elevator companies and touch free mobile apps are attracting high demand from building owners. But even with reduced passenger crowding in elevator cars and reducing the need to press buttons, people still prefer to avoid elevators
THE CONCLUSION
In general, we are seeing a shift away from larger downtown space. As for shared office space - we will have to see how 2021 plays out.
We are primarily receiving inquiries from funded startups and from larger companies that are looking for smaller and flexible office space for their executives.
If you want to have a real talk about your business and its future please contact:
