The Silicon Valley boom has led to higher real estate prices, in an already largely exclusive environment. There are increasing complaints about the lack of affordable housing in the Bay Area, in general, and San Francisco, in particular. Such is one of the drawbacks of success.
Things are not any easier in the commercial real estate sphere. Hi-tech companies find it difficult to both locate and afford data center space. So, when something comes up on the market, it does so with much fanfare. Such is the case with the recent announcement of the first San Francisco data center building for sale in a number of years.
After years of waiting, hi-tech companies can bid on a data center building for sale in a prime San Francisco location. The remaining question is whether the industry will have to wait another number of years before such an opportunity arises again?
“While the shortage of housing in San Francisco and its exorbitant residential and commercial real estate rates are well documented, the city’s tight supply of new data center space and power capacity is a more hidden issue.” ~DataCenterKnowledge.com
The Property Sits in a Prime Location
Located at 1828 Egbert Avenue, the property is near 200 Paul, a hi-tech data hub. Thus, whoever purchases the available data center building will find themselves in the proximity of such companies as DigitalOcean, telecom XO Communications, Telx and UnitedLayer.
As any business owner knows, it is important to ascertain whether a neighborhood will thrive or become abandoned in the future. It seems this area remains poised for continued growth.
Developers have been attempting to find occupants for years, with little success. Cardiff Mason Development began searching for tenants in 2007. Its plan was to lease the space. The tenant would pay rent and provide its own power support and cooling systems.
Previously, Teleglobe, a telecommunications service, leased two floors at 1828 Egbert Avenue in 2001. Unfortunately, the company went bankrupt soon thereafter, in a competitive economic climate.
What is the Problem?
One central problem for commercial real estate developers is finding tenants that can afford to pay the rent and, simultaneously, earn enough money to remain in business. The success of Silicon Valley can be a double-edged sword, in this regard.
The Bay Area has an enviable quality of life, with international-class restaurants, top universities and higher than average incomes. Yet, the cost of living rises as the demand for these resources begins to exceed the supply.
It seems, at some point, the selling price and availability of hi-tech real estate has to meet the demand of businesses. If so, perhaps, this data center building will prove to be the first of many that will become up for sale.
A Solution is Necessary
San Francisco needs a continued influx of hi-tech enterprises to sustain its thriving economy. Attracting these businesses requires an adequate amount of commercial real estate properties. Furthermore, the locations must be in safe areas, where these information companies can succeed. 828 Egbert Avenue meets this criteria.
The only question is whether the city will have to wait more years before witnessing another data center building on the market? Hopefully, it will not be long.
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Katrina specializes in server products with Rack Solutions leading the IT industry for custom racking design