Cost-Cutting Dot Coms Flee Silicon Valley

Energetically rising office rents combined with a dot-com downturn has some cyber-companies fleeing the fabled Silicon Valley.

Some firms are shifting operations outside the Bay Area, where lower rents may free up needed funds. Sunnyvale, Calif.-based Performance Polymer Technologies, which makes elastic components for semiconductor firms, is planning a move to Roseville, Calif., just outside Sacramento. In Roseville, the company will pay $1 per sf for a 27,000-sf building, as opposed to the $2.50 per sf its Sunnyvale landlord will soon begin to charge.

And Redwood City, Calif.-based InsWeb announced in June that it would move to Sacramento by the end of the year. Company sources estimate it will pay $1.60 per sf there, rather than $7 per sf in their current quarters.

Sacramento commercial rents average $1-$2 per sf, while Silicon Valley commercial rents average about $7 to $8 per sf.