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Market Report

San Francisco Office Investment Forecast

2020 Outlook

Large, Contiguous Blocks of Space Remain in High Demand; Low Supply Supporting New Construction

 

Awash with capital, tech firms target premier office space in San Francisco. Despite rent doubling over the past decade, technology companies appear unfettered when leasing premium office space in the metro, a trend that will persist this year. Pinterest, Google and Asana committed to large blocks of space in the past 12 months, while Facebook committed to all 800,000 square feet at Burlingame Point when the campus comes online around midyear. A lack of large blocks of available space encourages tenants to ink new leases months ahead of availability, which has pushed pre-leasing to nearly 70 percent across the metro. More than half of the unleased space under construction is in the First Street Tower. Currently the largest project underway, the 1.25 million-square-foot development finishes in 2023. Smaller, traditional office users are feeling the pressure from the heated market. Year-over-year rent gains in the Class B/C sector accelerated to more than 7 percent due to tight vacancy.

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