Q4 2024 San Francisco Office Occupier's Guide

After 5 challenging years, the San Francisco office leasing market is finally stabilizing. For the second time since 2020, the vacancy rate remained flat QoQ, at 33.1%, with YoY vacancy increasing by just 3.8%. Net absorption also improved significantly, with the YTD total reaching negative 653K SF, a substantial improvement compared to negative 7.8M SF and negative 3.9M SF of absorption recorded in 2023 and 2022, respectively. Availability also stabilized, declining 0.8% YoY. However, despite these encouraging trends, vacancy remains at record highs, applying downward pressure on asking rents, which fell $0.43 or 0.6%, QoQ, to $67.53.

Overall, there is growing optimism within the market. Major employers like Salesforce, Amazon, JPMorgan Chase, and Goodwin Procter LLP, are returning to the office 4-5 days a week and San Francisco’s unofficial designation as the “AI Capital” is attracting businesses and talent.  Residents passed small business tax reforms through Prop M, and Prop B, which is a $390M bond focused on enhancing public spaces and improving healthcare facilities, aimed at supporting the revitalization of the downtown core. The City has ongoing programs to boost foot traffic, such as Downtown First Thursday, holiday pop-ups and Union Square events. San Francisco’s Mayor-elect will takes office in January and plans to focus on public safety, revitalizing the downtown core, and addressing the housing crisis.

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