San Francisco’s office market is starting to recover—but the pandemic plummeted the sector into a deep hole. According to the fourth quarter report from Avison Young, the office vacancy rate has surpassed the former peak in the financial crisis, reaching 19.1% at the end of the year, compared to 15.5% in 2009. The historical average is only 10.1%.

The vacancy rate is a reflection of meek office leasing activity. While there was some recovery of leasing demand last year, which increased more than 40% over the stalled market in 2020, leasing remains 41% below the pre-COVID era. The report notes that there is “no modern precedent” for this type of slowdown in leasing activity. Overall, office absorption in 2021 was -4.8 million square feet, representing 5.5% of the current inventory—which also surpasses the absorption during the Financial Crisis, when absorption represented -2.3%. It is important to note that absorption has recovered 14.3% from 2020.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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