SF offices fastest in the nation to empty out

Vacancy more than tripled from Q4 2019 to end of 2022, ending at 24.1%

SF offices fastest to empty out
(Illustration by The Real Deal with Getty)

Office vacancy in San Francisco is among the highest in the nation – with space in the city the quickest to empty out.

The rate at which San Francisco offices become vacant was faster than other big city in the U.S., the San Francisco Business Times reported, citing Cushman & Wakefield.

The city’s now infamous vacancy rate grew from 5.4 percent in the fourth quarter of 2019 to 24.1 percent at the end of 2022, an increase of 346 percent, according to a Business Times analysis of the company’s Office MarketBeat reports.

Among the 10 other cities studied — New York, Los Angeles, Seattle, Portland, Boston, Houston, Phoenix, Chicago, Miami and Denver — the vacancy rate percentage increase during that period ranged from 22.1 percent to 129.4 percent.

The average vacancy rate percent increase was 56 percent.

San Francisco was also one of only two cities (along with New York) whose asking rents decreased during this period — from $82.40 to $73.70 per square foot, a decline of 10.6 percent.

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New York’s asking rents fell 1.1 percent.

At the same time, the average national asking rent in the fourth quarter in 2019 grew from $33.10 to $37.40 per square foot, an increase of 13 percent.

Uncertainty over the workplace is the major driver of what CBRE said this month is now a total of 27.6 percent office vacancy, with about half of all office space available in submarkets like West SOMA and Yerba Buena. Mission Bay is the most in-demand market and yet it still has a quarter of all office space available.

On top of increases in remote work, the office market must contend with a string of high-profile tech layoffs, including Twitter, Meta and Salesforce.
Emphasizing the “flight to quality” trend, Avison Young says trophy properties have had more visitor volume compared with other office types, but even then volume is only at 50 percent of pre-pandemic levels.

Still, that is the best foot traffic in the city, with Class A buildings showing visits at 45 percent of pre-pandemic levels and Class B buildings at just 20 percent in mid-December.

— Dana Bartholomew

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