Vacancy is expected to stay low, and supply and demand will remain unbalanced until 2022 or 2023.
SAN FRANCISCO—Office vacancy ticked up 40 basis points in the fourth quarter to 3.2%, while availability increased 180 basis points to 9.6%, according to a fourth quarter report by Newmark Knight Frank. However, demand also increased and still slightly outpaces supply at 8.1 million square feet.
While absorption was positive at 526,200 square feet, this amount included Facebook moving into 763,102 square feet at 250 Howard St., which is why there was an increase in vacancy despite positive absorption. Of the 3.3 million square feet currently under construction, 84% has been preleased or is rumored to be in lease. Another 4.4 million square feet are expected to break ground in 2020, and those projects are already 41.4% pre-leased or are rumored to be in lease. While some companies such as Uber are putting large blocks of sublease space on the market in preparation for a move into new locations, often that space is not available for a new tenant to move into for a year or more, according to the NKF report.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
