San Francisco County has one of the highest sublease markets in the country. A new report from Cushman & Wakefield analyzing sublease stock throughout the country shows San Francisco is second only to Manhattan in recording the largest square footage growth in sublease space last year, increasing a staggering 587% in 2020 compared to 2019. The supply now represents 51.8% of the overall office vacancy rate in the market.

Surprisingly, the pandemic was not the catalyst for the increase in sublease supply. The event was already in motion before the onset of the pandemic. "The initial wave of sublease space in San Francisco was due to big blocks entering the market during what was considered more pre-pandemic early in the first quarter of 2020, including Uber, in preparation for a move to its new headquarters in Mission Bay, adding space in four different properties for a total of approximately 800,000 square feet; Stripe adding 295,000 square feet in an expected move to South San Francisco; Macy's.com relocating back East and adding 243,000 square feet; and Credit Karma adding about 150,000 square feet in its planned move to Oakland," Robert Sammons, senior director of research in Northern California and the Northwest at Cushman & Wakefield, tells GlobeSt.com.

In early 2020, the increase in sublease supply was actually welcomed by the market, which had a limited supply of office and strong demand for quality space. "Going into 2020, there was a dearth of available space, large and small, in San Francisco with a vacancy rate of just 5.4%, the lowest of any major market in the U.S. It also had the highest average asking rent of any major market in the U.S., more so than the former perennial leader, Manhattan," says Sammons.