In early 2016–the S&P fell almost 10% while NASDAQ fell over 20%. Due to he disappointing IPO performance of some technology companies–venture capital companies declared a cutback  of venture funding and a revaluation of technology startups.  Boards began to encourage management to refocus on profitability over growth to minimize future capital requirements.  Future capital may need to be raised at lower valuation and therefore dilute stockholder values.  In turn,  this new paradigm caused some startups to cut back space requirements and put space onto the sublease market.

Recently, the S&P recouped much of the losses, and NASDAQ has reduced it loss to 6.5% from its end of the year close.  As shown by the chart,  San Francisco office rents tend to lag NASDAQ performance by six to twelve months.  If NASDAQ can hold or gain ground–tenant pull back will be relatively modest.    Other technology companies will have the capital to buy up weaker companies and continue to invest even if at more reasonable valuations.