Key Takeaways |
The third quarter of 2022 registered 1.5 million square feet of negative net absorption. The South Financial District was the greatest contributor at just under 800,000 square feet negative driven by downsizes in tech.
Effective rents ticked down compared to the previous quarter and are expected to continue to fall as landlords adjust to historically high vacancy and availability. Tenant concessions are expected to continue to increase.
Office sales were limited in the third quarter of 2022 due to a slow return-to-office trend, rising interest rates, and uncertainties around the future of office use. There were a few notable Class B sales, particularly south of Market Street, which could indicate an interest in value-add or adaptive re-use of existing office.
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Key Metrics
Lease Transaction
SALEs Transaction
Derek Daniels
Research Director | San Francisco
derek.daniels@colliers.com
+1 415 288 7803
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Research & Forecast Report – Q3 2022
San Francisco
Office Market Snapshot
At the end of the third quarter 2022, the San Francisco office market continued to be impacted by the pandemic and subsequent drop in office use. The city closed the third quarter with record high office vacancy after posting significant negative net absorption, following a general trend in tenant rightsizings and downsizings -- citywide -- but particularly in the North and South Financial Districts. As of mid-September, office use data compiled by Kastle Systems showed significant growth in return-to-office figures across major U.S. markets, although the San Francisco metro tracked the lowest rate of growth and remained well below capacity. Until a significant, sustained return-to-office trend emerges in San Francisco, it is expected that vacancy will continue to remain near historic highs. Despite record high vacancy, citywide average asking rents remained relatively flat over the quarter, although effective rents ticked down a bit, with the Class C segment seeing the most significant drop, reflecting trends in increasing tenant concessions and flight to quality.
Q3 2022
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Lease and Sales Transactions |
Q3 2022
San Francisco Market Effective Rents | Q3 2022
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Isabella Day
Research Analyst | San Francisco
isabella.day@colliers.com
+1 650 486 2210
Brandon Bissada
Senior Research Analyst | San Francisco
brandon.bissada@colliers.com
+1 415 288 7885
Market Indicators
Relative to Prior Period
Vacancy Rate
Net Absorption
Under Construction
Weighted Rental Rate
Weighted Class A Rental Rate
Sales Volume
Sales Prices
Q3 2022
Q4 2022
Forecast
Steffen Kammerer
Regional Managing Director | Bay Area
steffen.kammerer@colliers.com
+1 408 282 3801