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Report Sees Positives Despite Negative Absorption

SAN FRANCISCO-A new mid-year market report finds that while San Francisco's commercial real estate market continued experience negative space absorption during the second quarter, a glimmer of hope can be seen in the numbers.

By Michelle Savage | Updated on July 31, 2002

SAN FRANCISCO-There are subtle signs that San Francisco’s commercial real estate market may be near, despite the continued excess of available space in the area, according to a mid-year market report issued by Insignia/ESG.

“Leasing activity increased two-fold from fourth quarter 2001, and although the deterioration of the city’s office market persisted, the velocity of the decline decreased dramatically from the first quarter,” says Mark Bodie, head of Research for Insignia/ESG’s San Francisco office.

For the sixth straight quarter, net absorption was negative. However, according to Insignia, the second-quarter total of negative 241,000 square feet is a significant improvement from the figures posted throughout 2001. Additionally, the second quarter showed that the flood of sublease space that drove the market downward is finally subsiding, as the sublease inventory decreased market wide by 395,000-sf.

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