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San Francisco Market Reports

San Francisco Office Market

Average Asking Rent (Price/SF) $84.89
Vacancy Rate (%) 3.2%
Net Absorption (SF) 328,446

The overall vacancy rate remained steady at 3.2%, and the amount of direct vacant space was unchanged quarter over quarter. Overall availability nudged up from 8.0% at the end of the first quarter to 8.5%, or 7.1 million square feet. However, the current demand of 7.9 million square feet outpaced supply. Leasing activity was constrained due to the tight market, down 24.6% in the first half of 2019 compared with the first half of 2018. Although 328,446 square feet was absorbed city-wide, 87.2% of this absorption was in the remaining floors of Salesforce Tower and 181 Fremont Street.

All of the 1.4 million square feet currently under construction with delivery dates through 2020 has been pre-leased, including 1 De Haro Street, 633 Folsom Street, 1515 Third Street, and the GSW Event Center Complex. Vacancy is expected to remain low, as supply and demand will remain unbalanced until new developments come online in 2021 through 2023. As a result of restricted supply, asking rates again increased this quarter, and overall asking rates increased 9.2% year over year to $84.89/SF, while Class A rates increased 9.7% year-over-year to $89.35/SF.



San Francisco Office Market Report
2Q19
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