Apr 23, 2024 - Real Estate

San Francisco's office vacancy hits nearly 37%

cool office interior

The Figma office at the Phelan Building in San Francisco. Photo: The Collective

San Francisco's office market is beginning to stabilize after a four-year downturn but it will take years to fully recover, according to commercial real estate firm CBRE.

Why it matters: San Francisco's commercial office market activity has implications for the city's property and business tax revenues, as well as transit operations.

By the numbers: The city's office vacancy rate increased from 35.6% in the last four months of 2023 to 36.7% in the first quarter of this year, but the rate of increase has slowed, per CBRE.

  • Civic Center/Van Ness has the smallest total vacancy rate, at nearly 27%, while Yerba Buena has the highest in the city at about 57%.

What they're saying: Remote work remains a "significant barrier to a more vibrant San Francisco," Colin Yasukochi, an executive director with CBRE, said in a written statement.

Zoom in: Some of the more notable lease transactions in the first four months of this year involved tech company Adyen's 150,000-square-foot sublease in SoMa, accounting firm KPMG's 138,326-square-foot lease renewal near Yerba Buena and design company Figma's 97,600-square-foot lease renewal at the historic Phelan Building on Market Street.

What to watch: CBRE expects leasing activity to increase throughout the next year, in part due to lease renewals and relocations of employers that already have offices in San Francisco, per the report.

  • The firm also expects the city's office vacancy rate to peak over the next few quarters.
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