SoMa’s Office to See Recovery

In San Francisco, few neighborhoods felt the pandemic’s office flee like the one south of Market Street.

Once arguably the densest aggregation of tech companies in the city, SoMa packed in marquee names like Twitter, Yelp and Airbnb.

But when the Covid-19 outbreak sent workers home, so too went the neighborhood’s vibrancy. Several major companies — including the aforementioned three — abandoned the area, leaving SoMa to effectively crumble. In the first three months of this year, it held one of the city’s highest office vacancy rates at almost 50 percent, according to global real estate services firm JLL.

However, the word on the street is a creeping revival. Looking ahead to the rest of 2026, Alexander Quinn, senior director of Northern California research at JLL, expects SoMa to heat up.

“I think you’ll see the east side of SoMa go pretty quickly,” Quinn told The Real Deal over the phone on Tuesday. “We’ve already seen touring activity grow and there is a huge opportunity for SoMa to see significant growth.”

Quinn draws his conclusion not from leasing activity within SoMa as much as a tightening in markets surrounding the neighborhood. Mission Bay to the southeast, where OpenAI has leased 1 million square feet, recently posted a 20 percent vacancy rate, far below the citywide rate of around 30 percent.

Showplace Square, to the southwest of SoMa, has a 27 percent vacancy rate, while the South Financial District, which sits just north of SoMa, tracks with the rest of the city at roughly one-third vacant. Importantly, much of this vacancy is lower-tier office space. Companies returning to an in-person format have preferred high quality digs for their employees, and much of the higher-end spaces have been filled.

In its fourth quarter report, CBRE projected that the city’s “diminishing supply of high-quality Class A space” would create a spillover effect and boost leasing and rents in SoMa and a few other submarkets.

With a vacancy rate of 47.4 percent, nearly half of SoMa’s office space still sits empty. However, with only 6.7 million square feet of inventory in the neighborhood — compared to FiDi’s nearly 60 million square feet — Quinn said it will only take a few major leases to turn SoMa’s vacancy rate around.

Major players are beginning to show interest again. Last year, streaming service Tubi moved its headquarters from FiDi into SoMa, now occupying 31,000 square feet.

In January, AI goliath Anthropic confirmed its lease of the tower at 300 Howard Street at the edge of the SoMa-FiDi boundary. Anthropic’s 480,000-square-foot lease, a space formerly occupied by FitBit, marked one of the largest post-pandemic deals in San Francisco.

Even some of the more ailing corners of the neighborhood have recently shown movement.

Since its opening in the heart of SoMa in 2022, the city’s newest office tower, 415 Natoma, symbolized the neighborhood’s struggle. As of last week, the 25-story building sat 97 percent vacant, and the tech company Thumbtack, the tower’s only tenant, was allegedly planning to move out of it 20,000 square feet on the building’s 13th floor.
Then, news broke last week that Brookfield Properties sold the debt attached to a roughly $400 million construction loan in a deed-in-lieu of foreclosure deal with Bethesda, Maryland-based Meridian Group and Fenway Capital Advisors out of San Diego County. The partnership’s plans are unclear, but the bet is an optimistic sign for a property and a neighborhood trying to find its footing.