CBRE: SF Office Market Availability at 20%

SAN FRANCISCO-Overall availability in the San Francisco office market increased by 40 basis points in the second quarter to 20.2%, according to a quarterly report from CB Richard Ellis that tracks 76.4 million square feet in the market. The last time the combination of direct vacancies and sublease availabilities crested 20% of the market was 2003, amid the aftermath of the dot-com bust.

CBRE’s report put Q2 net absorption at minus 929,000 square feet, approximately the same as Q1, pushing the mid-year total to minus-1.8 million square feet. The full-year total for 2008 was 2.1 million square feet.

The bulk of the negative net absorption was due to a couple of large leaseholds that had been on the sublease market but expired in the second quarter, according to CBRE, namely the 375,000 square-foot Charles Schwab space at 1 Montgomery, and a 154,816 square-foot Macy’s space at 22 4th St.

At first blush the CBRE data seems at odds with Colliers International. Colliers, which tracks 82.8 million square feet, pegs the overall availability rate 600 basis points lower at 14.1%, which is 60 points below CBRE’s estimation of the direct vacancy rate. Colliers’ report estimated net absorption at minus 688,512, pushing the year-to-date total to minus 1.2 million square feet.