Study: Downtown San Francisco office rent, sales remain pricey while vacancies high

Despite its post-pandemic challenges, San Francisco is the second most expensive market nationwide for office space, according to a new report from CommercialEdge.

California markets continue to be among the most expensive nationwide and San Francisco led the Western region, ranking as the second most expensive office market nationwide in February, with in-place rents averaging $63.63 per square foot, reflecting a 4% yearly increase, according to the study.

The larger Bay Area followed, posting rates of $54.09 per square foot after remaining relatively flat year-over-year. San Diego ($43.07), Los Angeles ($42.62), and Seattle ($36.28) all registered asking rents above the national average of $33.41 per square foot. Meanwhile, Portland remained the most affordable Western office market, with in-place rents at $28.10 per square foot, the report states. 

Despite commanding the highest rental rates in the West, San Francisco continues to struggle with record-high vacancies, posting the highest vacancy rate among the top 25 U.S. office markets at 27.8%. And the Bay Area as a whole saw a 26.2% vacancy rate, one of the steepest year-over-year vacancy surges, its rate climbing by 540 basis points, according to the report.

In February, nearly half of the Western office markets posted sale prices above the national average. San Francisco was the third-priciest market nationally, with office properties in thecity trading at $282 per square foot. Meanwhile, the larger Bay Area and Los Angeles posted sale prices of $208 and $207 per square foot, respectively. These two markets also led the region in total sales volume, with the Bay Area closing $467 million in transactions year-to-date, followed by Los Angeles at $334 million. 

For more in-depth market insights on the top 25 office markets, read the full report here: 
https://www.commercialedge.com/blog/national-office-report/