Office Vacancy Rate in San Francisco Hits a Pandemic High

Having inched down to simply below 20 p.c on the finish of final 12 months, the efficient workplace emptiness fee in San Francisco ticked again as much as a pandemic excessive of 21.7 p.c within the first quarter of 2022, representing 18.7 million sq. toes of vacant workplace house within the metropolis, together with 5.3 million sq. toes of house which is technically leased however sitting vacant and 13.4 million sq. toes of un-leased house, based on knowledge from Cushman & Wakefield.

As some extent of comparability, there was below 5 million sq. toes of vacant workplace house in San Francisco previous to the pandemic with a emptiness fee of 5.7 p.c, versus a long-term common of round 12 p.c. And as we outlined final quarter, foreshadowing the primary quarter rise:

Regardless of the drop within the total emptiness fee on the finish of 2021, the quantity of un-leased workplace house in San Francisco truly ticked up, each within the absolute and comparatively, with 1.3 million sq. toes of house that was being provided for sublet within the third quarter having been leased, reoccupied or returned to the market as instantly vacant house. And complete leasing exercise truly dropped from the third to fourth quarter of final 12 months, with “a shortage of enormous transactions,” a push again of return to workplace dates (sure, the surge in COVID instances is significant, past growing hospitalizations and deaths), and below 1 million sq. toes of house having been leased, together with sublets, for a destructive internet absorption.

And when it comes to lively demand for the 18.7 million sq. toes of vacant house, Cushman & Wakefield is at the moment monitoring lively necessities for 4.9 million sq. toes of house, which was down from the fourth quarter of final 12 months and 33.8 p.c beneath the pre-pandemic demand.