SAN JOSE, February 25, 2016
– Trends2016 (Colliers International’s 17th annual commercial real estate forecast) provided an outlook on Silicon Valley’s commercial real estate market, a Bay Area Mayor’s roundtable discussion, and insight into the economic and political landscape for 2016. More than 400 Colliers clients and industry professionals attended the highly anticipated forecast at the historic California Theatre in downtown San Jose on Wednesday, February 17, 2016.
Colliers International reported that total gross absorption in Silicon Valley was up nearly 13% in 2015 to 27.6 million square feet. The Valley’s total occupancy gain measured 9.5 million square feet, more than double the 3.9 million square foot occupancy gain measured in 2014 and the most since 2000. Jeff Fredericks
, executive managing director with Colliers, was cautiously optimistic in his commercial real estate outlook for the Silicon Valley in 2016. “2015 was a record smashing year” said Fredericks. Despite record activity, Fredericks cited a decline in the number of transactions during the final quarter of the year. When summarizing his forecast for the coming year, Fredericks said, “Are we going to see an encore performance in 2016? Last year, we said that there was plenty of runway left. This year, there is some runway, but you’re going to need a faster plane.”
At this year’s Trends, the event also included a panel with San Jose Mayor Sam Liccardo, Oakland Mayor Libby Schaaf and Santa Clara Vice Mayor Teresa O’Neill. Moderated by Fredericks, the panel of mayors discussed the challenges and opportunities each of their respective cities face. Mayor Schaaf commented on the draw for tech companies that are migrating into the cities. “There is an energy and vibrancy in the city that businesses are recognizing, and the talent that they are trying to recruit are also recognizing,” Schaaf noted. Mayor Liccardo trumpeted the Diridon area as San Jose’s great opportunity. “With the extraordinary amount of infrastructure coming in with high speed rail, BART, ACE, Caltrain and light rail, we're going to have 600 trains a day moving through that station at full build-out,” he said. “We've had a lot of interest from major employers who have been sniffing around, but no major announcements yet.” Adding to this, Mayor Liccardo notes, “What our city offers that our neighbors to the north and west cannot offer, is the opportunity to scale.” The area’s key challenges drew a consensus from each of the mayors: the ongoing housing imbalance and the need to improve the area’s infrastructure, most notably the transportation system. Vice Mayor O’Neill summarized this exquisitely in her comment, “Most of the state of California and other cities would love to have the problems we have. Yes, there are problems, but there are also opportunities.”
The final speaker of the event, chief global strategist with Horizon Investments, Greg Valliere, discussed current economic conditions and the state of affairs in Washington in the 2016 election year, and whether or not we’re headed for a recession. Valliere noted that he felt strongly that the US is not headed for a recession in 2016, noting two major reasons why. “People have a lot more money in their pockets now,” Valliere said, citing lower gasoline prices and increased consumer spending as key indicators to watch. “Real wages are starting to go up,” he continued, “and there are clear signs of healing in the labor markets.”
Valliere went on to discuss the bizarre current presidential election that is gripping the nation, and he expects many more twists and turns to come. Valliere discussed the strengths of each candidate as well as the biggest challenges they face in actually winning the election.
Fredericks closed the event with a summary of the market. Trends2016 also marked the release of Colliers International’s 2015-2016 Market Report and Forecast. In a summary of his forecast, Fredericks writes "Coming off a record year for leasing and space absorption in 2015, the office market is likely to come back to earth a bit in 2016.” He continues, “Still, the pump is primed to churn out very good results barring any meltdown of the economy.” For more information about the event and to download a complete copy of the report, please visit the event website.
About Colliers International Group Inc.
About Colliers International Group Inc.
(NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries
. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’
Global Outsourcing 100 for 10 consecutive years, more than any other real estate services firm.