Fast-growing technology companies like Salesforce.com Inc., Dropbox Inc. and LinkedIn Corp. are renting big chunks of office space in towers before they are built, a payoff for developers who bet on this city’s boom.
At the beginning of the year, six developments were under way or in advanced planning with a total 2.8 million square feet, none of it leased. Since then, tech companies have committed to 64% of that space as the epicenter of the industry shifts north from Silicon Valley.
The largest lease in the city’s history came last month, when Salesforce.com, a cloud-based software vendor, took 714,000 square feet in a 1,070-foot skyscraper being built by Boston Properties Inc. and its partner, Hines. The building will be the city’s tallest, eclipsing the iconic Transamerica Pyramid by 217 feet.
Other deals include the leasing of an entire 26-story tower, still under construction, by business-networking site LinkedIn. Real-estate website operator Trulia Inc. has taken one-quarter of another new tower and microblogging service Twitter Inc. is expanding into a former furniture mart that is being redeveloped by Shorenstein Properties LLC.
Other developers benefiting from the high-tech expansion include Kilroy Realty Corp., Tishman Speyer and the asset-management arm of J.P. Morgan Chase & Co. Between 2011 and 2013, each decided the market was hot enough to move ahead on buildings without tenants, a risky proposition that caused many investors and analysts to fret about overdevelopment.
“We just felt really good about what was going on” in San Francisco, Douglas Linde, Boston Properties’ president, said of the decision to break ground last year.
Read more: Wall Street Journal Bay Area Builders‘ Big Bet Starts to Pay