SF office availability rises even after big Sephora lease

Availability hit record in first quarter from previous three months

350 Mission Bay (Dead.rabbit, CC BY-SA 4.0, via Wikimedia Commons, iStock, Savills)
350 Mission Bay (Dead.rabbit, CC BY-SA 4.0, via Wikimedia Commons, iStock, Savills)

San Francisco’s offices aren’t filling up, even after Sephora signed the biggest lease since the pandemic.

Availability hit a peak of 26.8 percent in the first quarter, up from 26.1 percent in the previous quarter and more than double the pre-pandemic rate of 11.1 percent, according to Savills’ quarterly report.

While companies leased 1.5 million square feet, a marked improvement from 400,000 square feet a year ago, the figure is still below the five-year average of 1.7 million square feet. Some 23.1 million square feet of office space is available in the Bay Area, more than double what was on the market pre-pandemic.

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The slow progress came after Sephora subleased 16 floors totaling 286,000 square feet the the Salesforce East building at 350 Mission Street. The space will serve as Sephora’s new U.S. headquarters, consolidating two locations at 425 and 525 Market Street.

Available space for sublease has dropped almost 15 percent to 7.7 million square feet from the record 9 million square feet available in the second quarter of 2021.

Workers are returning back to work in San Francisco more slowly than in Los Angeles and Austin. Some 29 percent of offices were occupied as of mid-March, up from 10 percent during the omicron surge, according to data from security company Kastle. That rate is below nine metropolitan areas tracked by the company including 38 percent in LA and 58 percent in the Texas capital.

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