
Silicon Valley 'Bloodbath' Leaves Entire Office Buildings Empty - fiaz
http://www.businessweek.com/bwdaily/dnflash/content/jan2010/db2010015_516128.htm
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Alex3917
My startup actually just got some really awesome free office space in the
ground floor of a building where the company went from 100 people to four.
They are still paying 40k a month on the lease and have a year and a half
left, so one of the employees is just letting us work there until someone else
leases the space. It's pretty amazing though; right now my office is actually
a conference room surrounded on two sides by glass and overlooking a duck
pond.

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tdmackey
The article left out the fact that most of this commercial real estate excess
is left over from the dot com bust. At the height of prosperity between the
bust and the most recent financial trouble the vacancy rate was still around
16% compared to the 21% it is now. And unless you get somewhat lucky, most
owners in the valley still make more money by only partially leasing their
building at a higher cost than fully leasing it at relatively low prices. So,
while you may here a few stories of people getting decent lease rates they are
the small minority.

And I don't see how they article or title infers anything about the state of
tech as others have mentioned other than that it says Silicon Valley. While
this term is typically used to describe the tech industry in the area it has
become a more generic term for the south bay. The article makes it clear that
it is a real estate problem and that some tech companies are benefiting from
the over-speculation.

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samaparicio
This seems to me like a unique opportunity for next-gen startup incubators and
the coworking movement to lease space at rates that would enable startup
entrepreneurs to use the kind of digs that are normally completely outside of
their reach.

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JoeAltmaier
Still an order of magnitude more expensive than most other cities.

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sabat
And still for good reason.

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brandon
I'd love to hear your rationale.

I recently landed at a small startup in San Diego. We're downtown in class A
office space, 16th floor with a Pacific view, and we pay less than $2.50/sqft.

I'm having a hard time seeing how being in the bay area is worth 13× the price
_during a glut_ , but I've only worked here in San Diego so I could definitely
use some perspective.

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ghshephard
We're in the heart of the peninsula, Redwood City - pretty Decent digs (Former
Excite/@Home) Area - in the neighborhood of $1.25/Square Foot/month. Our
predecessor was was paying $0.95/square foot/month.

Based on my (rather limited sample) my analysis of the article is that the
rates being quoted were per _year_, not per month.

$2.50/SqFt per month is pretty expensive unless you are in Downtown San
Francisco.

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dnsworks
Are you in the old Excite@Home building that has the Stanford name on it now?
Those offices were incredible, with the slide from the 4th floor to the 1st.
Ahh, the fall of the silicon empire!

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ghshephard
Nope, we're on the other side of Broadway, in the building with a slide from
the second to the first. That Slide, thought, has been boarded off. Rumor has
it someone broke their ankle on it at some time.

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dnsworks
Ahh I know which building you mean. Fun stuff though. You should rip the
boards off the slides, get a video camera and post to youtube! Never let
caution get in the way of fun!

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mikeryan
I'm not sure this isn't still a leftover from the original dot-com era bust
and the existing real estate bubble issues.

This doesn't seem like a reflection on the state of tech in Silicon Valley
(which the title infers) but the state of over-speculation in area commercial
real-estate.

This is a good thing for tech companies.

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dws
There's a lot of space left over from the dot-com run-up, and it's built for a
profile of VC-funded startup that's been on the decline since the bubble
burst. A lot of the empty space I see in the south bay is of the old 'big open
space in the middle surrounded by offices' model that assumes the big,
florescent-lit cubicle farm that used to be the norm.

So the space is there, but it's a good thing for a type of tech company that
seems to be getting rarer.

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tokenadult
"Commercial property foreclosures will at least double in 2010 and job growth
won't return for two years after that, held back by U.S. consumers who are
saving more and 'getting back in line with sustainable spending habits,'
Haveman said."

That suggests that the return to a boom economy is still a long way off, as
commercial property investments absorb a lot of capital, and bearing those
losses will cause many spending cutbacks throughout the economy.

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grellas
This is a good observation about the macro economy in Silicon Valley but the
activity level for early-stage startups is now strong and getting stronger
(VC-funded startups still lag) - for the right startups, this is a very good
time to launch and develop in anticipation of an eventual recovery.

Agree with your point that the broad recovery is still quite a ways off
(lesson for startups: don't get overextended in the short term as you build).

