SAN FRANCISCO-Leasing activity has slowed over the last several quarters but has been strong enough to keep vacancy falling and rents rising, according to a Colliers International third quarter market report. Net absorption was positive for the 13th consecutive quarter, soaking up 452,243 sf and pushing overall vacancy down 60 basis points to 10.5%.

Approximately three-quarters of the net absorption occurred in the city's two financial districts, where direct vacancy now stands at 8.8%. The lack of supply in the districts has prompted a surge in rents. Since this time last year, average effective class A rents in the Financial District here have risen approximately 23% to $50.60 per sf while average class B rents have risen nearly 38% to $35.39 per sf.

While the number of deals quarterly held steady at 136, their aggregate size, 1.1 million sf, is 45% less than the second quarter, when total activity was two million sf, according to the report. Total leasing activity in the first quarter totaled 1.8 million sf.