Search
 

SF Office Market Continues to Tighten

SAN FRANCISCO-For the 12th consecutive quarter, more space was leased than came available, dropping overall and class A vacancy to 12.7% and overall vacancy to 13.9%, according to an early second quarter report. The trend has new construction on the horizon.

By Brian K. Miller | Updated on July 04, 2006

SAN FRANCISCO-The second three months of the year saw San Francisco’s overall and class A vacancy rates both fall more than 100 basis points to 13.9% and 12.7%, respectively, according to a second quarter report by Cushman & Wakefield. C&W’s locally based senior director Chris Roeder tells GlobeSt.com that vacancy in the Downtown class A market fell to 11% from 11.7% in the second quarter and should be in single digits by this time next year, setting the stage for higher lease rates and new development.”Everyone expects rent spikes to occur when that happens,” says Roeder. “We’re already over $40 (per sf per year, full service) in the North of Market area and the (CBD) average is very close to $40.”

Companies that inked significant expansions this quarter include Capital Group, Winston Strawn, FTI Consulting, O’Melveny & Myers and Merrill Lynch. Although net absorption is down a little bit from previous quarters, Schroeder says several large lease deals are expected to be signed, which should boost absorption figures. BEA Systems, McKesson Corp., Blue Shield, Bain & Co. and Army Corps of Engineers all are likely to sign deals over 75,000 sf during the third quarter, though some are likely to be renewals, says Roeder.

“In general, you are seeing a lot of big tenants expanding where they are at,” says Roeder. “My personal guess is this time next year we will have seen job growth; it’s not only the big sized companies growing but also the small to mid-sized companies. I am continually receiving calls from brokers representing tenants I’ve never heard of, which means the tech market is coming back to some extent.”

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?

NOT FOR REPRINT

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

GlobeSt

Join GlobeSt

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

  • Free unlimited access to GlobeSt.com'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 ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

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