Broad perspective offered in Merc article

| September 1, 2009 | 1 Comment

Anyone reading this page likely caught the Merc’s front page article on the state of the Silicon Valley market yesterday.  If you haven’t yet, its worth a look.

 My colleague, Don Reimann, was quoted in the article and made what I think is an important observation– the utter dearth of new construction in the area over this decade will impact how the eventual market recovery progresses.  This is even more valid on the Peninsula, where it is a very short exercise to count up the speculative commercial projects to come out of the ground in that same time.  New construction should be expected to, on average, cause the building base to exhibit modest growth annually.  Compound this lack of new product over an extended period, and the effect of its absence will become noteworthy and eventually put strong upward pressure on rents for larger blocks of Class A space.  Given the current state of the capital markets, I could imagine a scenario where there is demand for new Class A space that the market just can’t fill through new construction, potentially extending the pressure.

 Too early to speculate on all this?  Sure– but I think it could be an ineresting little ripple effect to observe

Tags:

Category: Uncategorized

About the Author ()

Comments (1)

Trackback URL | Comments RSS Feed

Sites That Link to this Post

  1. Mountain View- primed for new construction | Opinion of Value | June 3, 2011

Leave a Reply

Your email address will not be published. Required fields are marked *