The red-hot residential real estate market in Silicon Valley might attract all the headlines, but the commercial real estate market just to the north in San Francisco also is booming.
The city's skyline is now dotted with cranes. Between 2009 and 2011, the city issued just 13 permits for cranes. Between 2012 and today? The count spiked to 87.
Those cranes are used to develop office buildings, where asking rents now average $63 per square foot, which is more than double the national average, according to Amber Schiada, director of research at Jones Lang LaSalle, a real estate services company.
Since the trough in the first quarter of 2010, commercial real estate prices have rocketed up nearly 90 percent, says Schiada.
When prices surge that quickly, some might worry that a bubble is developing, but real estate developers in San Francisco would strongly disagree.
"We believe in this market having long-, long-term legs," says Michael Covarrubias, CEO of TMG Partners. "We don't believe Silicon Valley is going away. We don't believe San Francisco is going away."
Covarrubias adds, "If an adjustment occurs, ironically, it's good for our business. That means prices will come down, and we can go do more transactions."