Office Markets in San Francisco,
Silicon Valley Stage a Comeback

With technology making a comeback, both San Francisco and the Silicon Valley office markets are finally in recovery, with rising rents and decreasing space. For example, Silicon Valley's vacancy rate is 12.4%, down from a high of 27.2% at the end of 2002 when the tech bust hit the market the hardest.

And as industry experts have seen in other cities including Boston and New York, tenants in San Francisco are willing to pay top dollar for fabulous views. Asking rental rates for a "full view," defined as panoramic views of the Bay and Golden Gate bridges, is averaging close to $80 per square foot in the best-quality office buildings -- a rate not seen since the height of the tech boom, says Maria Sicola, executive managing director of research for Cushman & Wakefield.

One trend affecting those markets: Some traditional Silicon Valley employers have been looking for space in San Francisco because they have found their younger work force prefers an urban environment to the sprawling tech campuses. Google Inc., based in Mountain View, Calif., already subleased space at San Francisco's Hills Plaza from Gap Inc.

Milan Makeover

Details of a master plan were announced yesterday for a $2.5 billion mixed-use project to redevelop a former railway site in Milan, part of larger efforts to redesign the northern Italian city over the next five years.

The 72-acre development, currently known as Garibaldi Repubblica, links three areas of northeast Milan: Garibaldi, Varasine and Isola Lunette. Together, the sites will comprise 2.47 million square feet of offices, apartments and a hotel component. In addition, the development will include a 26.6-acre public park and a new City Hall. And, in a city famous for design, there will be a Città della Moda, or fashion city, featuring a wide range of shops and a fashion museum.

Designed by architect Cesar Pelli, the project is being developed by Houston-based developer Hines, in conjunction with the municipality of Milan and the Lombardy regional authority, which will both have new headquarters at the site.

Construction on Garibaldi Repubblica started in April and is due to be completed within eight years, according to Hines spokesman George Lancaster. Italian developer Galotti SpA is providing some of the financing, as is Hines's European Development Fund, says Mr. Lancaster.

Eight other architectural firms are also involved with the project, including New York-based Pei Cobb Freed & Partners.

Other large redevelopment projects in Milan include Milano Santa Giulia, a mixed-use project being developed by Italian real-estate group Risanamento SpA in the southeast of the city at a cost of €1.5 billion, or $2 billion. It is due to be completed by the end of 2011.

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