The San Francisco Bay Area, which includes the cities of San Francisco, San Jose, and Oakland within the nine counties surrounding the San Francisco Bay, is the best area in the nation for commercial real estate, according to a report from the Wells Fargo Economics Group. The area is experiencing a boom due to rapidly growing technology sectors, including mobile devices, social media, cloud computing, data analytics, and life sciences. High demand office space for rent can be found in the technology hotbed of Silicon Valley, located in Santa Clara County. San Jose, also in Santa Clara County, offers commercial space for rent for firms who wish to locate close to established technology and financial institutions such as Adobe, IBM, and Ernst & Young. Oakland, a center for business and healthcare services and transportation, offers lease opportunities for a wide range of industries. High-end rental space is found in the South Financial District, South of Market, North Financial District, Union Square, and Mid-Market areas of San Francisco.
A very affluent region, rich with technology, finance, and commercial interests, the San Francisco Bay Area boasts two of the wealthiest counties in the United States. The City of San Francisco is the main economic and cultural engine of the San Francisco Bay Area and Northern California. It attracts and supports a range of industries, with a large concentration of corporate headquarters, law firms, banks, real estate firms, and insurance companies. The Bay Area houses the second most Fortune 500 companies in the nation, including such firms as Wells Fargo and Charles Schwab.
Technology and software companies are the biggest drivers of the current booming economy in the Bay Area; Twitter, Google, Yahoo!, Trulia, Costco, Sony, and Best Buy are headquartered here. Hundreds of Bay Area biotech firms, including Genentech, Inc. Gilead Sciences, Inc., the California Institute of Regenerative Medicine, Pfizer Biotherapeutics, and Bayer lead the industry in research and development for aging, microbiome, digital health, personalized medicine, HIV, Alzheimer’s and cancer. One third of the total worldwide biotechnology workforce is employed in San Francisco. The San Francisco Bay Area also houses Aerospace industries such as NASA and Lockheed, in which major research facilities are maintained.
The Bay Area boasts superior transportation options, including streetcars, subways, buses, trains, and ferries, which connect nearly every community in the 7,000 square mile region. San Francisco’s vast public transportation network, known as Muni, is comprised of historic streetcars, buses, and subways, and serves more than 200 million riders per year. The Bay Area Rapid Transit system (BART) also travels through San Francisco, from the bustling Financial District to San Francisco International Airport, connecting travelers from the city, the East Bay, and the Peninsula. Caltrain traverses San Francisco, Santa Clara, and San Mateo Counties.
The Bay Area is known for its breathtaking beauty, liberal politics, and tech industry strongholds. The climate features a temperate summer and mild winter but can be quite cool and foggy, especially close to the ocean. Five regions define the Bay Area, including the North Bay, East Bay, South Bay, the Peninsula, and San Francisco. The North Bay, known for its wine country, is located just north of the Golden Gate Bridge and is the least populous of the Bay Area regions. The most populous sub region is the East Bay, which includes the cities of Oakland, Berkeley, Pleasanton, and Walnut Creek, and has around 2.5 million residents. Silicon Valley is located both in the South Bay and on the Peninsula, which contains many San Francisco suburbs. San Francisco itself is the hub of financial and cultural activity, and is known for historic streetcars, Alcatraz Island, a citywide commitment to sustainable living, and a focus on arts and culture. From national parks and sports teams to the Golden Gate Bridge, the San Francisco Bay Area offers numerous attractions that bring millions of visitors every year.
The first European party to set eyes on the San Francisco Bay accompanied the Spanish explorer Gaspar de Portola, and viewed the vast waterway from a 1200 foot high ridge while looking for the port of Monterey. Six years later, another Spanish explorer, Juan de Ayala, sailed into the bay and with his team gathered the information necessary to create the first map of the area. The United States seized the region from Mexico during the Mexican-American War between 1846 and 1848, and California was accepted for statehood in 1850. The California Gold Rush brought a population boom, and San Francisco became one of the world’s greatest seaports through the 19th century. In the late 20th century, the dot-com boom and later the second technology revolution in the early part of the 21st century have defined the area as a hotbed for innovation, collaboration, and research and development.
Home to approximately 7.44 million people, the San Francisco Bay Area has experienced rapid growth in the last several decades, especially among residents ages 18-65, who comprise 65% of the total population of the region. The combined urban area of San Francisco and San Jose is the second largest in California, boasting a rich ethnic diversity of immigrants predominately from European, Asian, and South American countries. The median income is $74,000, placing it well above both the state and national averages. Over 50% of San Francisco Bay residents have obtained a bachelor’s degree or higher, with 64% of the population living in a family household.
The San Francisco Bay Area has experienced strong job growth over the last three years, with employment reaching 3.3 million, the same level of employment recorded just before the Great Recession. The tech industry is driving growth, fueled by heavy venture capital investment and robust IPO activity. The Bay Area has long captured a healthy share of the nation’s venture capital dollars, but with close to $28 billion raised in 2013, the percentage is now approaching 50%. IPO activity resulted in $55 billion raised in 2013, with simultaneous increases in commercial real estate demand. The majority of growth is occurring in Santa Clara, San Mateo and San Francisco Counties; this growth is expected to taper, but remain healthy.
Many commercial leasing opportunities can be found within the five major regions of the San Francisco Bay Area. In San Francisco County, there has been steady growth and positive occupancy gain driven by the tech industry. San Mateo County, on the Peninsula, also reports positive net absorption, with growth also fueled by tech and software companies. San Mateo is the Bay Area’s premier marketplace for high-end life science space. The South Bay has Silicon Valley, which is the hottest area for occupancy growth, but struggling with the challenge of supplying enough quality space to match surging demand. The East Bay, with Oakland, Walnut Creek, and Pleasanton, is the Bay Area’s center for government, healthcare, education, and personal and business services. The North Bay is a smaller, boutique trade region, with higher vacancy rates and flat rent asking prices.