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Study: SF Class A CBD Market Tight by 2010

SAN FRANCISCO-A new study that uses historical absorption to look forward three different ways--aggressively, moderately and conservatively--shows a tight CBD class A market here by the end of 2009 regardless of which track the market takes.

By Brian K. Miller | Updated on February 15, 2006

SAN FRANCISCO-The San Francisco CBD class A office market will be tight no later than the end of 2009, according to a Cushman & Wakefield study that uses historical absorption to make aggressive, moderate and conservative vacancy and rent projections. Regardless of the track the market ends up on, it spells good news for building owners who can hold on, says Christopher Roeder, the San Francisco-based C&W senior director who crunched the numbers.

Historically, if you look back 20 years and extract 2001 as an anomaly, San Francisco has been absorbing on average more than 1 million sf annually, says Roeder, whose conservative projection shows 2.5 million sf of net absorption over the next four years. That would push average CBD vacancy down to 8.68% by the end of 2009 from 14.84% at the end of 2005 and push average annual full-service direct asking rents up to $55.83 by the end of 2009 from $36.48 at the end of 2005, according to the study.

The aggressive projection–5.4 million sf of absorption over the next four years–shows the San Francisco CBD surpassing the conservative projection in the third quarter of 2008. By the end of 2009, the aggressive track has average vacancy down to 3.72% and the average direct asking rent at $71.30 per sf per year. The moderate track–4.5 million sf of net absorption through 2009–shows average occupancy and direct asking rents meeting the conservative projection during the first quarter of 2009 and ending that year at 5.94% and $63.15, respectively.

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