While technology companies are pushing the real estate industry to move faster, the process of acquiring space is still very time consuming. Parkash Ahuja, Executive Vice President of Corporate Services for Charles Schwab and Company, says the real estate process works very slowly, taking anywhere from six months to three years to complete a deal and move in. Ahuja goes on to say real estate needs to be treated as a commodity, or leased on an as needed basis. Technology based markets are feeling the impact of our New Economy as vacancy rates have hit record lows, and occupancy costs are going through the roof. In a recent report published by CB Richard Ellis, Northern California markets have seen occupancy costs increase by as much as 30 percent since the beginning of the year.
Technology companies are willing to pay a premium to find the right environment.
Owners in major markets like New York, Boston, and San Francisco are in the driver s seat, says Philip Witt, Vice President of First Union National Bank. Markets like Chicago and Philadelphia, with new construction threatening, may be slightly weaker, but we just haven t seen the down yet, in reference to pricing in general. Our requirements are usually for 20,000 square feet and above, and in a city like San Francisco, it can be a real challenge to get our needs met. In the tighter markets, tenants are finding the need to be more creative with their space requirements. For example, we may have a regional sales office that commands the image so we ll keep that office in the tight area.