Rapid Rent Rise Tests Demand Strength

SAN FRANCISCO—Strong leasing activity tightened available space supply during the second quarter and steepened the upward rental rate trend. So says a recent San Francisco office market overview from CBRE. “High-tech companies expanded more aggressively throughout the city and were responsible for eight of the 10 largest leases during the quarter, further depleting both new and existing office space supply.”

More than 1.3 million square feet of new construction space was pre-leased this quarter by three high-tech firms and when combined with existing space, the high-tech sector was responsible for 60% of 4 million square feet overall, says the firm’s report. That compares with 50% and a quarterly leasing activity average of 3 million square feet in 2013.