Office Vacancy Rate in San Francisco Just Hit a New High

Having held at a pandemic excessive of 21.7 p.c within the second quarter of this yr, the efficient workplace emptiness price in San Francisco ticked up one other 130 foundation factors within the third quarter to 23.0 p.c, representing 19.9 million sq. toes of vacant workplace house within the metropolis, with the quantity of house which is technically leased however unused and being provided for sublet having elevated for the primary time in six quarters to five.2 million sq. toes and the quantity of un-leased house having elevated from 13.7 to 14.7 million sq. toes, in accordance with information from Cushman & Wakefield.

As we outlined on the finish of the second quarter, “whereas the tally for the second quarter emptiness price in San Francisco did embrace Google’s settlement to sublease 300,000 sq. toes of house at 510 Townsend, it didn’t embrace the 412,000 sq. toes of house that Salesforce is now providing for sublet in its tower at 50 Fremont Avenue, the inclusion of which might push the workplace emptiness price in San Francisco to over 22 p.c with over 19 million sq. toes of successfully vacant house,” and demand for house had sharply dropped.

As some extent of comparability, there was lower than 5 million sq. toes of vacant workplace house in San Francisco previous to the pandemic with a emptiness price of 5.7 p.c and the emptiness price in San Francisco has averaged nearer to 12 p.c over the long run.

Whereas the estimated energetic demand for workplace house in San Francisco did leap from 3.1 million sq. toes on the finish of the second quarter to 4.8 million sq. toes on the finish of final month, that’s in comparison with over 7 million sq. toes of demand previous to the pandemic with considerably extra out there house. And whereas the general common asking lease for workplace house in San Francisco ticked down a bit of over 1 p.c within the third quarter to $74.80 per sq. foot, and has dropped round 10 p.c from its peak in 2020, the lower is basically attributed to a shift within the combine, with “rents in high tier buildings hav[ing] held robust and, in some circumstances, climbed larger over the previous few quarters.” We’ll maintain you posted and plugged-in.