BOMA!

Leasing in San Francisco is so explosive that supply projected to be developed in the next two years could be gone in just six months, four fortune tellers predicted yesterday at BOMA's monthly luncheon. That means 2014 and 2015 are going to be scary if tenants are looking for more than 100k SF. (The best roadside $5 we've ever spent.)

So says Cornish & Carey Commercial Newmark Knight Frank SVP Liz Hart, who joined Kilroy VP Mike Sanford, CBRE research guru Colin Yasukochi, and JLL managing director Wes Powell (wearing their best psychic attire). While there will be scant large blocks of space, we'll see plenty of options for the average 10k SF to 15k SF user, which shuffle around the city so much anyway. (Musical offices is S.F.'s official game.)

Colin reports that there's now 4M SF under construction, and 1.4M of that is currently leased. That could go up by another 1M SF in the next 30 to 60 days, he points out. Liz can't confirm or deny any rumors related to Box (we first reported its monster lease coming to 222 2nd), but Colin says some 2.5M SF is approved but hasn't started construction yet. South Financial has the highest amount of tech companies, taking up 5M SF, while North has just 1.8M SF. Being closer to Market—with unique build outs—is a good pitch these days. 

Last year, there was $12.1B of venture financing that hit companies in the Bay Area. How that money is fueling real estate is unbelievable, Liz says. The concept of unicorns—or billion-dollar companies—have spread like wildfile. (Not quite what we pictured when we heard "unicorn," but we'll take it.) There are 18 unicorns in S.F. that grow, on average, 50k SF per year. If these companies—including newly minted ones like eventbrite—continue to expand like they have in the past, development sites will get picked off one by one quickly, she says. The one area she's not a fan of is the Van Ness corridor; she's only done one deal there ever and doesn't see it picking up as quickly as people think.

Class-A rent averages $60/SF these days, and some projects coming out now will come with significant rent increases, according to Mike. There's doubt tech and media tenants are driving this market and want to be in SoMa, he says, and Mission is becoming the new Market Street with Transbay Terminal. Kilroy likes South Financial and SoMa the most (where the developer is mainly focused), and being in between Caltrain and BART is a plus. That was the selling point for tenants at 360 3rd, he says.

Liz predicts that the average asking rental rate for the entire CBD at the end of 2014 will be a whopping $64.13/SF full service. (Now that their hats are off, do we have to believe them?) Since 2010 rents have risen 70%—which is really good for landlords but tough for tenants, says Wes. He's leased over 10M SF and has 14 years of experience at JLL; last year alone, he did 1.8M SF.