Today’s office boom, unlike 2000’s, looks sustainable

A record-high stock market. Tech startups growing in a frenzy. A national unemployment rate under 4 percent.

The year? 2000.

The first tech boom pushed San Francisco’s Class A office rents to a record high of $80.16 per square foot in the central business district. It was a level unmatched until last quarter, when the asking rent rose above $81 per square foot, according to brokerage Cushman & Wakefield. (Adjusted for inflation, the 2000 record would be the equivalent of $125.74 per square foot in today’s dollars.)

While the current economic expansion shares many of the same characteristics as the 2000 boom, a key difference is that it appears more sustainable, according to Robert Sammons, research director at Cushman & Wakefield. Rents have stayed

“This expansion we’re in now has been much longer and steadier.”

Robert Sammons, research director at Cushman & Wakefield

at a higher level for longer.

“The dot-com boom was relatively quick, with just five quarters of average asking rents above $70 per square foot,” Sammons said. “This expansion we’re in now has been much longer and steadier as we’re in our 13th quarter of rents over $70 per square foot.”

Instead of the likes of Pets.com signing big leases — and going bankrupt less than a year after going public — tech giants with billions of dollars in annual revenue are growing in the city with no signs of slowing. Google, Facebook, Salesforce and Amazon have all signed major deals in the past year, and they’re continuing to add jobs around the Bay Area.

Rents are expected to rise slightly in the next few years, but a dearth of new office construction will make finding space particularly challenging for companies that can’t afford premium rents, according to Sammons.

“I’m just concerned that we are running out of room at any price,” he said.