Q1 2025 San Francisco Office Occupier's Guide
After a strong finish to 2024, the San Francisco office market had a mix of positive and negative indicators to start the year. Vacancy increased 0.1% over Q4 2024, while year-over-year (YoY) vacancy increased 0.7%, the smallest annual increase since 2019. Availability rose 0.5% quarter-over quarter (QoQ) to 37.2%, though it remains below the all-time high of 37.4% recorded in Q3 2024. Asking rents fell 0.9%, to $66.93, however asking rents in the CBD increased $0.18, QoQ. The increase was driven by Class A office space, while Class B rents continue their downward trend. Net absorption was negative 339K SF, driven by space consolidation from large San Francisco employers seeking to optimize their real estate footprints.
Despite a few negative metrics, the overall sentiment in the market remains positive. Leasing activity increased over Q4 2024, with several large renewals underscoring some of San Francisco’s top occupiers’ confidence in San Francisco. The State and Local governments implemented RTO mandates of 3-5 days a week, complementing the private sector RTO mandates in Q4 from major San Francisco employers, which will result of tens of thousands of workers back to the office. In conjunction with positive RTO trends, Artificial Intelligence (AI) remains a bright spot for the office market as San Francisco remains the leader in AI investment and innovation.
Despite a few negative metrics, the overall sentiment in the market remains positive. Leasing activity increased over Q4 2024, with several large renewals underscoring some of San Francisco’s top occupiers’ confidence in San Francisco. The State and Local governments implemented RTO mandates of 3-5 days a week, complementing the private sector RTO mandates in Q4 from major San Francisco employers, which will result of tens of thousands of workers back to the office. In conjunction with positive RTO trends, Artificial Intelligence (AI) remains a bright spot for the office market as San Francisco remains the leader in AI investment and innovation.