The wave of new construction has finally hit the shores of the CBD.

SAN FRANCISCO—Preliminary first quarter summary statistics for the San Francisco office market from Cushman & Wakefield show that the wave of new construction has finally hit the shores of the CBD. According to Andrea Arata, Northern California research manager at Cushman & Wakefield, “Despite the slight uptick in vacancy within the CBD, strong employment, increased leasing velocity, and expansions within the technology sector indicate that we are in a solid position to absorb the new space that will continue to come online this year and next.”

According to Cushman & Wakefield’s preliminary Q1 stats, leasing activity totaled 1.9 million square feet, the third-highest level for the first quarter in 10 years.

In addition, technology companies continued to dominate leasing activity during the quarter with significant new leases by Twitter, Dropbox, Linkedin, Trulia and Practice Fusion, as well as Google‘s 372,000-square-foot renewal at Hills Plaza.

But it isn’t just technology companies that are making a mark. Bare Escentuals, for example, took 94,000 square feet lease at 71 Stevenson, KPMG renewed of 81,000 square feet at 55 Second St. and Winston & Strawn signed a 52,000-sqaure-foot renewal at 101 California.

On the development side, both new buildings and major renovations were completed in the first quarter including Foundry Square III (505 Howard) and 680 Folsom.  “As a result of the new space coming online in the CBD, the vacancy rate inched up to 9.1% from 8.9% last quarter,” says the firm.

Direct Citywide asking rents continued their upward trajectory and rose 3.4% during the quarter to $58.63 per square foot as more companies take down these large blocks of new space. “In the CBD, rent growth was even stronger during these first three months of the year with a 3.8% increase to $60.19 per square foot, the highest average rent in nearly 14 years.”