Thursday, July 24, 2014

The Fed Fueled SF Tech Boom Has Pushed Up Office Rents 81% in Four Years

The Information reports:
In 2010, when the average rent for top grade office space fell to $34.02 a square foot, there were 22 blocks—real estate lingo for office spaces of 100,000 square feet or more—on the market. The city scrambled to alter its local tax laws to keep Twitter in town and generally worked to make itself more attractive to tech companies.
Today, with San Francisco displacing Silicon Valley as the location of choice for many tech companies, the average price per square foot for so-called Class A office space in San Francisco is $64.45, according to the real estate company CBRE. That's close to the dot-com bubble peak of $67.20 in the third quarter of 2000.
One non-profit, the In-Home Supportive Services Consortium, recently had their rents raised from $18 to $45 per square foot. According to the San Francisco Chronicle, the only way for the organization to stay in the city was to move into a basement with no windows.
"They are turning our old offices into tech space. I get it - everybody wants to be across the street from the Twitter building," at Market and 10th streets, [Deputy Director Mark Burns] says. "As much as we hate to be underground, I feel fortunate to be here for the next 10 years."
Note Well: This Federal Reserve manipulated boom will eventually crash, like they all do. Murray Rothbard explained why in Austrian School Business Cycle Theory. There are both cyclical and secular trends to this SF boom, so it won't be an entire loss, but,when it comes. it will be very, very ugly.


1 comment:

  1. Not only have office rents gone up, but Industrial Office REITS, have soared in value.

    The Fed spurred Pursuit of Yield Rally that came through Global ZIRP is likely over. The higher Benchmark Interest Rate, $TNX, is terminating the unprecedented carry trade and debt trade investing in the Yield Bearing Investments, such as PSP, DBU, EDIV, EVAL, IGF, EMIF, DGS, DRW, REZ, REM, FNIO, thus terminating the experience of fixed income investing, DTN. For example Industrial Office REITS, FNIO, which have gone up 100% in 5 years, traded 0.4% lower on the day.

    On Thursday, July 24, 2014, the S&P 500, $SPX, SPY, traded slightly higher to a new all time high; very likely communicating a US Stock Market, VTI, rally high. The ratio of US Stocks, VTI, relative to US Treasury Bonds, TLT, that is VTI:TLT, and the ratio of World Stocks, ACWI, relative to Aggregate Credit, AGG, that is ACWI:AGG, communicates that stocks have maxed out leveraging over debt.

    The bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.46% to 2.51%, continuing the see saw destruction of fiat investments. Aggregate Credit, AGG, traded lower, and the 10 30 US Sovereign Debt Yield Curve, $TNX;$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening.

    Popular Notes And Bonds, such as SHY, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, and MBB, traded lower. And Inverse Bond ETFS, such as SAGG, JGBS, traded higher.

    The age of low interest rates and a Flattening Yield Curve, seen in the Flattner ETF, FLAT, flattening, is over through and done, as the bond vigilantes are in control of the Bow of Economic Sovereignty, and are calling the Benchmark Interest Rate, $TNX, higher, effecting coup d etats worldwide, commencing the failure of credit and the death of currencies. The failure of credit is seen in the chart of Aggregate Credit, AGG, topping out in value, as well as is seen in the chart of Distressed Investments, FAGIX, which underwrote QE 1, trading lower in value.

    The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 24, 2014. In July 2014, Global Growth, DNL, started trading lower, communicating that investors no longer trust the monetary policies of the world central banks to stimulate investment gains, and global economic growth.