After reaching a pandemic high of 21.7% in the first quarter of 2022, the effective office vacancy rate in San Francisco remained unchanged in the second quarter of this year, accounting for 18.7 million square feet of office space. vacancies in the city, with a slight decrease. in the amount of space technically leased but vacant and available for sublease (which increased from 5.3 million to 5.0 million square feet) having been offset by an increase in the amount of unleased space, which fell from 13.4 million to 13.7 million square feet, according to data from Cushman & Wakefield.
For comparison, there was less than 5 million square feet of vacant office space in San Francisco before the pandemic with a vacancy rate of 5.7% and the vacancy rate in San Francisco has been in average closer to 12% over the long term.
And again, as we pointed out at the end of last year:
“Despite the decline in the overall vacancy rate at the end of 2021, the amount of unleased office space in San Francisco actually increased, both absolutely and relatively, to 1.3 million square feet. of space that was offered for sublease in the third quarter having been leased, reoccupied or put back on the market as directly vacant space.And total leasing activity actually fell from the third to the fourth quarter of the year. last year, with “a scarcity of large transactions”, a decline in return-to-office dates (yes, the surge in COVID cases is significant, beyond the increase in hospitalizations and deaths), and fewer 1 million square feet of space having been leased, including subleases, for negative net absorption.
Additionally, while San Francisco’s second-quarter vacancy tally included Google’s agreement to sublet 300,000 square feet of space at 510 Townsend, it did not include the 412,000 square feet at 510 Townsend. space that Salesforce now offers to sublet in its tower. at 50 Fremont Street, the inclusion of which would push the office vacancy rate in San Francisco to over 22% with over 19 million square feet of effectively vacant space.
At the same time, estimated active demand for office space in San Francisco fell from more than 7 million square feet in the first quarter of 2020, before the pandemic, to just over 3 million square feet at the end of the last month, with a sharp decline of almost 5 million square feet in demand at the end of the first quarter of this year.
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