Panelists present optimistic outlook for Bay Area and national commercial real estate based on strong performance and resilience across sectors in 2021
“As we move out of the COVID-19 restrictive landscape and forward into a new era of commercial real estate and business, we aimed to have this year’s Trends 2022 event capture a market narrative that properly conveys the shifts expected within our Northwest region and greater U.S. market,” said Managing Director for Colliers Bay Area Steffen Kammerer. “The conversation around real estate and how we utilize space flexibly and to create workforce agility is changing. For the West Coast we are very fortunate to have the opportunity to be the pilots of this new social experiment.”
In 2021, the U.S. commercial real estate market’s deal volume and price appreciation hit a record high. Warehouse distribution and multifamily out performed all other assets, and by the third quarter the office market’s absorption reversed it’s negatively trending course.
“This is the year we return to the office. We will start to see a flight to quality as companies reengage employees that are comfortable working from home and bring them back to the office with amenitized packages,” said National Director of Research, Steig Seaward said, “Medium-sized tech markets like Austin, Nashville and Salt Lake City will lead the way to recovery. Major tech markets along the West Coast, although challenged at the moment, will also be a part of that recovery.”
In comparison to other technology-driven cities on the West Coast such as San Francisco or Seattle, Silicon Valley was the only one to generate positive net absorption in the office sector. Silicon Valley’s office sector recovered all of the absorption lost in 2020, about 1.5 million square feet. Major technology companies like Google, Apple, Meta and Amazon that either maintained or expanded their real estate footprints in 2021 and the amount of new development in the market helped boost absorption for the area. “What we have in the Bay Area is a very mature, stable and profitable base of tech companies coupled with a very healthy startup culture. This will bode well for our office, R&D and industrial markets, but beyond that, it will positively impact other sectors of commercial real estate like multifamily, retail and the hospitality,” said Research Director for the Silicon Valley and San Francisco Peninsula Lena Tutko.
The program’s keynote, Senior Economist and Head of Narrative Analytics for Moody’s Analytics Thomas LaSalvia added that “Market sentiment for commercial real estate is very strong and will be sought after as other investments threatened by geopolitical tensions and supply chain factors become weaker. This new interest rate environment that we’re moving towards indicates slight cap rate increases and good conditions for real estate investment.”
Please visit our event website for additional event information and research, including the full Colliers 2022 Silicon Valley Trends Market Forecast Report.
Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 64 countries, our 17,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 27 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of 20% for shareholders. With annual revenues of $4.1 billion and more than $50 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.
Allison + Partners Northern California