SAN FRANCISCO-Improving economic indicators kept office vacancy on the decline and rents on the rise here during the first three months of the year, according to the first batch of quarterly reports to come out of the national brokerage houses. For the 11th consecutive quarter, the San Francisco office market experienced a net absorption of office space.

Number crunchers at Colliers International report 288,742 sf of net absorption, a 30 basis point drop in the vacancy rate to 12.9%, and big spikes in effective rents. The average class A effective rent in the North Financial District shot up 13.4% to $38.35 and class B effective rents jumped by 8% to $26.85.

Cushman & Wakefield’s first quarter report on the market puts net absorption at closer to 350,000 sf, producing a 100 basis point drop in the CBD class A overall vacancy rate to 13.8%. The overall office vacancy rate fell 120 basis points to 14.8%, according to the report. One year ago, the overall vacancy rate stood at 18%. In the South of Market district, vacancy hit a five-year low of 19.9%.

The current CBD class A asking rent of $38.16 per sf is up 4.6% from the fourth quarter of 2005 and up 22.3% from the first quarter of 2005. “Tenants who delayed their real estate decisions are now paying the price as the landscape has changed in just one year’s time,” states the report. View space remains in high demand and continues to command top dollar, with two recent upper-floor law firm renewals being inked in the mid $50s per sf.

San Francisco recorded nearly 4.1 million sf of sales activity in the first quarter, an 11.7% increase over one year ago, according to C&W. Most notably, Hudson Waterfront Associates purchased Bank of America Center (555 California) for $1.05 billion. It was San Francisco’s first billion-dollar sale since 1998.

“With only a few new office developments in the pipeline, most of them pre-leased, the office market is poised to experience further vacancy rate reductions,” states the C&W report. “Combined with an improving job market, the San Francisco office market is sparkling with momentum and optimism.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.