San Francisco leads nation in office occupancy losses

What's happening: Between October and December, San Francisco led metro areas with an office occupancy loss of 2.4 million square feet, per Moody.

• That resulted in an office vacancy increase of 5% and a 3.6% decline in rent.

Yes, but: It's not all doom and gloom.

• This week, tech company Rakuten opened its new 29,000-square-foot office space at 300 Mission St.
• In October, ChatGPT-maker OpenAI subleased nearly 500,000 square feet of office space in San Francisco.

The big picture: The stickiness of hybrid work arrangements "muted office demand," per the report, which says 2023 was "the most downbeat" year in the office sector since the global financial crisis.

• The national vacancy rate of 19.6% in Q4 surpasses previous peaks last reached in 1991 and 1986.

What's next: Real estate firm CBRE expects AI companies to continue to drive office demand in San Francisco, where such companies accounted for 28% of the total leasing activity in the city, the San Francisco Chronicle reports.

• But expect occupancy losses to continue through the first half of this year before stabilizing "as economic conditions improve and interest rates decline," CBRE's Colin Yasukochi told the Chronicle.