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San Francisco Market Reports

San Francisco Office Market

Average Asking Rent (Price/SF) $87.22
Vacancy Rate (%) 3.2%
Net Absorption (SF) 526,200

Vacancy ticked up 40 basis points in the fourth quarter to 3.2%, while availability increased 180 basis points to 9.6%. However, demand also increased and still slightly outpaces supply at 8.1 million square feet. While absorption was positive at 526,200 square feet, this amount included Facebook moving into 763,102 square feet at 250 Howard Street, which is why there was an increase in vacancy despite positive absorption.

Of the 3.3 million square feet currently under construction 84.0% has been pre-leased or is rumored to be in lease. Another 4.4 million square feet are expected to break ground in 2020, and those projects are already 41.4% pre-leased or are rumored to be in lease. While some companies, such as Uber, are putting large blocks of sublease space on the market as they prepare to move into their new locations, often that space is not available for a new tenant to move into for a year or more. As a result, vacancy is expected to stay low, and supply and demand will remain unbalanced until at least 2022 or 2023. The restricted supply continues to push asking rates, which increased 5.7% year-over-year to $87.22/SF. Class A asking rates increased 7.7% year-over-year to $92.41/SF.

 

 

 

 



San Francisco Office Market Report
4Q19
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