The recent crash in dot.com companies world-wide is having a dramatic effect on commercial property take-up. And it’s not going to get better.
In the US, one in ten companies succeeds, while nine in ten fail, predicts Kei Matsuda, senior vice president of economic research at Union Bank of California.

“It's a bit of a stretch to say that they'll all fail in the next 10 months, but I'd place what few dollars I have left on the bet that 80% of them will fail in the next 3-5 years.

And in an ominous sign for this Internet boomtown, the authors of a new study project that about 80% of the remaining dot-com companies in the Bay area will collapse in the next year, wiping out some 30,000 jobs.

The report by real-estate services concern Cushman & Wakefield Inc., of New York, and Rosen Consulting Group bases its projections for dot-com closures in part on a review of the current and projected earnings of a sampling of 150 publicly traded Internet companies.

The study, which focuses primarily on how commercial real estate will be affected by the technology shake-out, estimates that Internet-related companies will give up another four million square feet of real estate in the next year, a huge amount of office space.

At the peak last summer, prices paid for office property hit a high of slightly more than $500 a square foot. Rents rose even faster, as vacancy rates shrank to near zero in many areas, largely because of space-hungry Internet companies.

While the report is bad news for landlords, some suggest the overall San Francisco economy will remain stable as more traditional service industries have been adding jobs.