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Demand Growth Poised for Traditional Office Spaces,
Aided by Corporate and Government Policies
San Francisco’s office market well positioned for recovery. For the first time since 2019, annual net absorption turned positive as vacancy stayed at 27 percent throughout the second half of 2024. This overturn may mark an inflection point for vacancy to begin decreasing as more companies like Salesforce and Amazon adopt in-person work policies. The passage of Proposition 36, which aims to improve local urban conditions, may spur a greater influx of talent to return to central parts of the metro. Entering 2025, apartment vacancy downtown was below 6 percent. The consolidation of skilled workers here should bolster demand from firms seeking skilled labor and support the urban core, which saw the most intense pandemic effects. Notably, neighborhoods to the immediate north and south of the financial district saw heightened demand for Class B/C space last year, with vacancies falling over 200 basis points. Meanwhile, Class A demand in the core of downtown showed signs of improvement, as vacancy rose slightly but stabilized.