Report: Office vacancies plague San Francisco

Office distress continues to deepen across Western U.S. markets, with Seattle and San Francisco now topping the nation in office vacancy, according to a new report from CommercialEdge.  

San Francisco continued to be the office market with the highest vacancy rate nationwide, at 28.6%, following a 440-basis-point year-over-year increase. Seattle (27.5%) overtook the Bay Area (25.5%) as the market with the second-highest vacancy rate in the region, after a sharp yearly rise of 490 basis points. 

In other areas of the Western U.S., Denver (25.2%), San Diego (21.6%), and Portland (21.2%) also posted rates above the 19.9% national average. In contrast, Phoenix and Los Angeles remained below the national benchmark. The Los Angeles market (which includes areas like Ventura County and the San Fernando Valley) stood out with a 16.5% office vacancy rate—up just 10 basis points year-over-year—underscoring its relative stability in a region facing persistent occupancy issues, the report states.

The report notes:

• The Bay Area had one of the smallest pipelines nationwide at 480K sq. ft.
• The Bay Area did lead the region in office sales volume, reaching $727M year-to-date — more than three times last year’s figure.
• Seattle’s pipeline shrunk from 3.6M to 815K sq. ft. year over year, a 77% drop
• San Diego led the U.S. in sale prices, with office space trading at $665/sq. ft.
• Los Angeles was the only major Western market to see construction activity rise, with its pipeline growing from 1.7M to nearly 2M sq. ft. year-over-year. 

For more in-depth market insights on the top 25 office markets, view the report: https://www.commercialedge.com/blog/national-office-report/ and previous reports: https://www.commercialedge.com/blog/tag/office-reports/.