If Peninsula businesses feel like they’re having a flashback to 1999, it is most likely because of the strengthening office-space market.
For office space, the last business quarter — from April 2007 through June — was the “strongest quarter and year of rental rate growth since the market peaked in 1999,” according to a recent quarterly report from CB Richard Ellis, a global real estate services company.
San Mateo County is no longer recovering from the dot-com era but expanding, according to the report. The strength of the technology sector is helping fuel steady growth, which means more jobs coming to the Peninsula, officials said.
“The demand is very, very strong. The technology sector is certainly back in a big way,” said James Lees, senior vice president with CB Richard Ellis.
For example, social networking site Facebook.com expanded its space in Palo Alto by 20,000 square feet.
The average asking rate for a square foot of leased office space increased last quarter by $0.41 to $3.60, nearly a 40 percent increase over the average at this point during 2006, according to the report.
Helping drive demand in the area is the expansion of local heavyweights Google and Genentech. The latter is expanding at Oyster Point in South City to twice its current size over the next 10 years. With large companies expanding, others are being forced to find new space on the Peninsula, according to the report.
The vacancy rate on the Peninsula fell from 11.5 percent during the first three months of this year to 11.1 percent during the second quarter, making it the tenth consecutive quarter the rate has fallen.
Linda Asbury, president of the San Mateo Chamber of Commerce, said companies such as CapCom were filling up space in the Concar property near the highway. “If you talk to some of our commercial brokers we’re a pretty hot commodity, and to me that’s pretty exciting because that’s job creation,” she said.
In the last quarter, the Peninsula has seen 4,200 jobs added to the market, according to CB Richard Ellis.
Kovarus, Inc., a technology system integration company, recently moved its 40 employees from Emeryville to Oyster Point Boulevard in South San Francisco.
“Finding space was a challenge,” Peter Castaldi, the principal of Kovarus, said of the firm’s six-month process to find a new home.
The report said the Peninsula is “well positioned for further growth into next quarter and the foreseeable future.”