Q2 2020 San Francisco Market Report

For the first time in a decade, the San Francisco office market experienced a quarter-over-quarter decline in rental rates. From Q1 to Q2, rents declined by nearly 120 bps and vacancy increased by nearly 250 bps. Sublease space continues to increase to levels unseen in recent history, alongside massive Q/Q increases. Also notable is the increase in the ratio of sublease availability to total availability, a metric historically correlated with declines in direct rental rates. Net absorption drastically declined from -156k SF in Q1 to approximately -1.3MM SF in Q2. The City extended its eviction moratorium for commercial tenants in hopes of mitigating COVID-related business implications. Tenants continue to sign leases, albeit at significantly reduced rates, including First Republic Bank, Airtable, the AIDS Foundation, among others.