Leasing activity was slightly higher this quarter compared to the past two quarters, according to Studley, but companies are continuing to give up space. Approximately 460,000-sf of office space was put on the market in the Financial District alone this quarter. The report highlights Fleetbank Robertson Stephens' shutdown earlier this year that added about 100,000-sf at the Bank of America building to the sublease market.

Studley reports that tenants who are relocating from one building to another generate a large amount of the city's leasing activity. However, these tenants are not necessarily looking for more space. Instead, they are seeking the bargain rents offered in the city's brand new developments. Due to the lack of demand and the large amount of vacant space, landlords are offering state-of-the-art space at rock-bottom rates.

In addition, the Financial District has an overall availability rate of 21.7%, with most of the available space in the upscale buildings. Outside of Rincon/South Beach and Mission Bay, says Studley, the Financial District has the highest Class-A availability rate in the city.