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Market Report

San Francisco Office Market Report

2Q 2023

Suburban Locales Less Stressed as Economic
Uncertainty Hinders Office Leasing Downtown

Sublet availability reaches all-time high. Recent new lease signings from firms like Roblox, Waymo, Convene and SAP indicate companies are still pursuing office space in San Francisco. However, these commitments have been overshadowed by tenants reducing their footprints in response to hybrid work models and layoffs in the tech sector. Many blue chip corporations put up large blocks of space for sublease due to these headwinds, lifting sublet availability above 13 million square feet as of April, the largest total on record. Operations are facing fewer challenges from new supply, however. Many downtown projects that were approved prior to the health crisis have stalled due to declining market conditions, possibly aiding performance in existing offices. Furthermore, Mayor London Breed aims to revitalize the CBD by offering tax incentives up to $1 million for three years to businesses that open new local offices. These are longer-term solutions, and vacancy will continue to rise in the short-run while recessionary fears moderate office demand.
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