In addition to 7.87 million square feet of un-leased office space now spread across the city of San Francisco, which is up from 6.7 million square feet of un-leased space just three months ago, there is now another 7.99 million square feet of office space which has been leased but is sitting vacant and being offered for sublet, which is up from 7.2 million square feet of sublettable space at the end of last year, according to Cushman & Wakefield.
As such, there is now 15.85 million square feet of vacant office space spread across the city for an overall vacancy rate of 18.7 percent, which is up from a vacancy rate of 16.7 percent three months ago and versus a vacancy rate of 6.0 percent at the same time last year. And that’s not including another 1.3 million square feet of space that’s either under construction or in the process of being renovated.
At the same time, while leasing activity has inched up from a 30-year low at the end of 2020, only 433,000 square feet of space was leased in the first quarter of 2021. And that’s versus 1.1 million square feet leased in the first quarter of last year, a long-term average of around 1.6 million square feet per quarter and a post DotCom-era low of 933,000 square feet leased in the second quarter of 2001.
And while landlords had held firm through the second quarter of last year, the average asking rents for office space in San Francisco has now dropped 12 percent to $73.76 per square foot, per year, which is back to mid-2018 pricing when the vacancy rate was running closer to 7 percent, which suggests there’s quite a bit further to drop.