San Francisco's Role in US Office Absorption

SAN FRANCISCO—A combination of lack of new supply, the strength of technology and energy tenants and a deep talent pool is responsible for strong absorption in the San Francisco office market, Maria Sicola, head of research for the Americas for Cushman & Wakefield, tells GlobeSt.com. A just-released C&W report shows Q1 US office-market absorption increases of 133% year over year, with San Francisco’s occupancy gains coming in at 1.2 million square feet for the quarter, behind Midtown South New York (1.7 million square feet) and Chicago (1.4 million square feet).

As GlobeSt.com has reported recently, several large office leases have been signed in the market, including Salesforce.com‘s 714,000-square-foot lease at 415 Mission St.; significant new leases signed by Twitter, Dropbox, LinkedIn, Trulia and Practice Fusion; as well as Google‘s 372,000-sq. ft. renewal at Hills Plaza. In addition, as GlobeSt.com reported last week, for the first time since the late 1990′s dotcom boom, tenants are now in the market for more space than is currently available, leading to a game of “musical chairs,” according to Kidder Mathews‘ EVP of brokerage Reed Payne. The firm reported ±350,000 square feet in positive net absorption.