News & Research Archive

How The City's Traffic Congestion Effects Real Estate Decisions

Mar 20, 2015

San Francisco Traffic CongestionI have been in commercial real estate sales for over 30 years. Each day, up until two years ago, I drove my car to work and used my car for tours. Today, I take Muni and use Uber for transportation to and from my tours. Tired are the days of touring clients around in cars for a number of reasons. Tenants no longer have time for formal tours as before. You often find yourself showing two properties at the same time.

In San Francisco, finding parking is next to impossible and traffic congestion a real problem. Today, you can't possibly figure out how long it will take to get from point A to point B within the city limits. Therefore, as a real estate broker, driving around in my personal car to do tours is no longer feasible.

Today, driving services such as Uber, Lyft, and Sidecar offer a convenient way to be picked up and dropped off to your destination, giving me flexibility to organize tours and offer a convenient way for my clients to get back to their offices–– parking-free, ticket-free and headache-free.

With vacancy rates falling fast, most businesses are well aware of the effects of traffic congestion as more people work and live here. Additionally, more workers are ditching their cars and instead relying on public transit, cabs and other driving services, or their own two legs to get them to their destinations. Therefore, the need to live and work near public transportation that allows access to outlining areas around the Bay Area becomes even more important.

I often ask individuals, "Where would you like to have your office located?" The answer I typically receive is always the same, "Near Bart or Muni."

If you bring up districts, such as Jackson Square, North Waterfront, Civic Center or Van Ness, interest levels drop. The challenge is with low single digit vacancy rates on or near Market Street, where our main transportation exists prices are the highest and most tenants simply cannot afford it.

With rents now averaging $67.00 per square foot in Downtown San Francisco, you would think that these outlying districts would get a serious look. Oakland is also along the Bart line. However, although the San Francisco districts mentioned above and Oakland are seeing strong activity, it's not a location of choice by the majority of the firms looking for office space.

It's not just a question of making it convenient for their workers to get to and from work. Jackson Square is a seven-minute walk from the Bart station on Montgomery Street. It is more of a problem because if the tight job market and how competitive each firm has to be to recruit talent today. Often times, it's not about money either, since most firms remain competitive in regards to wages.

The decision for a worker to join a firm often times rest on additional perks such as the design of the office space, employee benefits, and corporate culture. Particularly, tech firms' employees are no longer working 9:00-5:00 jobs and will often leave work late in the evenings. This is when having an office close to public transportation becomes more desirable.

As traffic continues to grow, both in terms of car and public transportation use, adding in extra time just to get to your car or train stop will create more frustration for workers in the future.

The challenge for businesses today will be the location and price point of their office. Business owners will need to find the best location in order to attract and keep employees, while also finding affordable space so that they can keep their doors open.

Photo Credit: C.M. Keiner via Compfight cc


Written by: Hans Hansson


Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 30 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email or call him at (415) 765-6897. You may also check out his website,

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