TMC has just completed another tenant representation assignment in San Francisco. This was relocation for the Imai, Tadlock, Keeney & Cordery law firm to the Mills Building at 220 Montgomery Street.
For most of our clients in the City that signed leases 5 years ago, rents have doubled. This has been the standard. Think of a 10,000rsf office that signed a lease in 2011. A $27/rentable square foot/year lease, turned into$30/rsf/year in 2016, with graduated rental increases. In the final year of the lease in 2016 their rent was $300,000. But now they face the sticker shock of today’s rents. You can figure what was $30 is now $60. What was $40 is now $80.
And because of the aggressive nature of many landlords, many deals that were $30/rsf/year 5 years back are now $80/rsf/year or $800,000. Congratulations if your company has an extra $500,000 laying around to pay yearly for office space in San Francisco. Over 5 years that’s $2.5M in higher rent than the good old $30 days.
That relatively simple math problem impacts companies in a variety of different ways. TMC has been proactive to work with clients on this. First off, you have to find a good deal. And $60/rsf/yr. buildings aren’t going to lease for $30 or $40/rsf. Second, you have to plat map where the employees live and customers work. Exploring targeted areas for relocation outside the City is a very valid alternative.
Helping companies implement telecommuting, downsizing, open space concepts and hoteling ideas are services TMC has been providing since the 1980’s. For Imai, Tadlock, Keeney and Cordery we found a building that suited their longtime San Francisco presence in the Mills Building at 220 Montgomery, an iconic San Francisco building. There they found one of the top landlords in the City, the Swig Company.
We have several clients that are dealing with increases like this in San Francisco. And we have found $47 sublease spaces in $67 submarkets. We have helped strategize to make spaces more efficient. In one case a tenant that signed a lease five years back moved to a better building and is paying an overall lower rent/month than they were paying in the space they left. It takes a lot of hard work to make successes for tenants in the San Francisco office market. TMC seems to be able to do that with the help of our clients and the landlords we find for them.