For Silicon Valley entrepreneurs, a glut of office space means room to negotiate
If your dream is to house your company in a snazzy office–and you have the wherewithal–then you’re in luck. The commercial real estate market is imploding and likely to keep on doing so much of this year. What that means is landlords are ready to negotiate–heavily.
The epicenter of this trend may be Silicon Valley. It’s experiencing the biggest office glut since, well, the last bust. There was more than 43 million square feet of vacant space as of the third quarter, according to Bloomberg. Commercial property foreclosures are expected to double. Approximately 21% of Class A space is going empty.
Since 2007, developers built more than 4 million square feet of speculative office projects. They figured a horde of young companies would want to move from their initial research and development space into bigger digs. That didn’t happen. There’s one office complex, Moffett Towers in Sunnyvale, that has leased only one of its six buildings. And it’s only partially rented space in that location.
But this could also be one of the silver linings of the downturn. What’s bad for landlords tends to be good for tenants. And landlords are getting squeezed by renters asking for discounts of 10% or more.
So, if you want office space, it’s time to pounce. Understand that published rates are complete and total fiction. Ask for all the extras you want–free rent, free renovations, leases of as long or short a duration as you desire, a guarantee that you can keep your rent at the current cheap level for many years. And, if you want to renegotiate your current lease, do that.
Go for it .