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Office rents to fall in the most expensive market in the US
Rents in San Fran are expected to fall to their lowest level since 2014
Home to the most expensive market in the country, San Francisco is expected to cool off due its a glut of supply.
About 5 million square feet of new office space is expected to hit the market this year — a figure that’s equivalent to the past three years’ worth of office construction — along with 3.3 million square feet of sublease space, according to Bloomberg.
The latter is partly a result of tech companies moving into newly built offices like the Salesforce Tower and 181 Fremont — for Saleforce and Facebook respectively. In other cases, companies’ projected needs never materialized (Twitter), while others are moving out to Oakland for cheaper rents.
For 2018, Costar estimates rents will drop by about 0.9 percent to a price of about $64 per square foot, with decreases continuing for the next two years at 1.4 percent in 2019 and 3.5 percent in 2020. If the predictions are right, San Fran’s vacancy rate will inch above the American metro average to around 10 percent. [Bloomberg] — Erin Hudson