Waterfront rents sink with market 

Rents are sinking for some of the most modest waterfront properties in The City.

In a bid to fill vacant buildings, the Port of San Francisco is looking to match area office rental prices, which have been falling for the past two years.

One example of a deal that could be in the works is 626 Amador St., an aging two-story building vacated by a concrete company. The monthly price to rent the space just north of Hunters Point could drop by one-third to $1.25 per square foot.

Similar deals are becoming available elsewhere along the Bayfront, much of which is owned by California and managed by the Port.

The Port relies on rental income from its buildings and parking lots to pay staff salaries and invoices, and to repay loans that were taken out to improve its property.

The San Francisco office market has been falling since late 2008, with rents declining for nine consecutive quarters.

The Port’s annual lease revenue from office space fell by $1 million during the past year, according to Leasing Manager Jeffrey Bauer.

“It has affected our bottom line; there’s no getting around that,” he said.

But during the same period, the Port’s revenue from leased restaurant, shopping and parking space grew by $2.9 million, according to Bauer.

Strong tourist spending in the Fisherman’s Wharf area contributed to the growth.

“Because the Port is so diverse, we’re weathering this particular recession pretty well,” Bauer said.

Much of the Port’s office space is housed in former industrial buildings, known by real estate professionals as class C space.

That type of no-frills, lowest-cost office space will likely become cheaper along the waterfront after an expected vote today by Port Commission members.

Prospective tenants that have been talking to the Port about leasing vacant inexpensive office space include solar panel, genetic testing and other technology-focused companies, according to Bauer.

San Francisco office real estate agent Frank Fudem said technology companies, including startups and established firms squeezed out of Palo Alto by a hot office market, are providing hope for owners of vacant class B and C spaces in an otherwise-miserable market.

“If the Port has space that looks cool, then that would appeal to these tech sectors,” Fudem said.

jupton@sfexaminer.com

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