SAN FRANCISCO (CBS SF) — San Francisco has become the most expensive place in the country to do business. It costs more to rent office space in The City than pricey Manhattan.

Offices are renting for $72.26 per square foot in San Francisco, compared to $71.85 a square foot in Manhattan, according to a report from CBRE, a real estate research company based in Los Angeles. Not since the dot-com boom has the cost office space in San Francisco been higher than New York.

Industry analysts say it is a classic case of short supply and high demand. The mass-migration of tech companies has made inventory scarce in a market that was tight already.

Colin Yasukochi, CBRE’s director of research and analysis says tech tenants occupy nearly a third of San Francisco’s occupied office space, nearly double the percentage during tech boom of the 90s.

“The market here in San Francisco has been largely driven by the tech industry, which has really been one of the growth leaders coming out of the recession,” Yasukochi told the New York Times.

It seem doesn’t matter which part of San Francisco businesses choose — office space is high in every neighborhood. Yasukochi says that’s because techies value having space to park their bikes and play with their pets, over killer views.

In nearby Silicon Valley rents are less. The average rent there is $52.92 per square foot.

As office space becomes more and more limited and increasingly expensive in San Francisco and Silicon Valley, the CBRE says more firms are heading to nearby Oakland, where office space is about $33 per square foot.

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