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Citywide Direct Vacancy Nears Single Digit

SAN FRANCISCO-The overall CBD vacancy rate reached a five-year low, closing the third quarter at 12.0%. Citywide direct vacancy is down to 11.4%.

By Brian K. Miller | Updated on October 16, 2006

SAN FRANCISCO-The office market here has experienced 1.1 million sf of net absorption so far in 2006, with about half of that occurring in the third quarter, according to a third quarter review by Chris Roeder of Cushman & Wakefield San Francisco. As a result, Citywide vacancy is down to 11.4% and CBD vacancy stands at 12%, a five-year low, according to the report.

Moreover, the CBD sublease vacancy rate is down to 1.5% from 9.2% in mid 2002, which is alleviating its negative impact on the value of direct space. The current direct asking rent for class A space in the CBD, $39.72 per sf per year, is up less than 1% from the end of the second quarter but is nearly 20% ahead of where it was this time last year.

“As the increase in asking rental rates often lags the reduction in vacancy, it is expected that asking rents will continue to increase over the next quarter as the vacancy rate approaches single digits,” states Roeder in his report.

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