Office vacancies in San Francisco reached an all-time high in the first quarter of 2024, but there are signs the market has reached a turning point, according to preliminary data released by real estate firm CBRE.
The vacancy rate reached 36.6% in the first three months of 2024, up 1% from the final quarter of 2023. Compared to one year ago, the vacancy rate grew by nearly 12%.
But metrics that the firm uses to forecast future demand signaled the beginning of a transition out of the four year downturn.
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“The main differences from a year ago is that the amount of space coming on the market has slowed down, and the amount of tenants who are looking for space has actually increased,” said Colin Yasukochi, CBRE’s Tech Insights Center executive.
With buildings selling for 50% to 75% discounts and landlords offering incentives, Yasukochi said it’s a great market for renters.
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Fintech firm Adyen signed the top lease of the quarter at 505 Brennan Street, which was subleased from the previous tenant, Pinterest.
Also on the list, Law firm Goodwin Procter signed the largest new lease at 505 Market Street.
CBRE’s research shows companies are looking for nearly as much office space now as they did right before the pandemic. Yasukochi said tech and A-I companies account for 50% of the tenants looking for space today.
Even so, the high demand could take two to three years to reach the market, the firm said.
