Tech startups are taking up increasing numbers of office spaces in California. Since 2017, tech companies have accounted for 42 percent of the square footage in leased commercial spaces in North America. That amount is double the percentage of the financial industry.
This trend has caused an increase in rent prices for commercial spaces. In the top 25 cities for tech business, rent for office spaces rose 59 percent between 2000 and 2018, from an average of $199 per square foot to $316. Of the top markets for construction for new office space, 15 out of 20 were for tech markets.
It is not surprising that tech companies are driving demand for office spaces, considering their effect on the economy as a whole. Apple and Amazon's valuations both recently surpassed the trillion dollar mark. New tech jobs have surpassed the increases in other industries, with 1.1 million jobs added since 2010 for an 18.6 percent increase compared to 14.1 percent in the economy overall.
Much of the growth in the tech industry has clustered around cities like San Francisco. In some cities, the tech industry has become a critical factor for real estate growth. The rise in rental costs is making these areas unaffordable for some.
Business owners may benefit from speaking to an attorney with experience in commercial real estate before signing a lease agreement. Zoning laws usually determine what type of business can operate in a particular space. Many of the terms in a commercial lease agreement may be negotiable, including the cost of rental payments.
An attorney may be able to assist business clients who are looking to build new office space as well. Contract negotiation is key to obtaining a fair deal in a competitive real estate market. An attorney may be able to assist business owners and real estate agencies with commercial real estate contracts and litigation.