San Francisco’s office rental prices have fallen steadily over the past year, reaching a monumental low in the first quarter of 2021.
Prices fell by 14.8% last quarter, the first time in five years that the Manhattan office rental market is more expensive than that of San Francisco, as the San Francisco Chronicle first reported. (SFGATE and the San Francisco Chronicle are both owned by Hearst, but operate independently.)
SF offices rent an average of $ 75.32 per square foot in the first three months of the year, compared to Manhattan’s $ 75.99 per square foot, according to CBRE data.
At the beginning of 2020, the office vacancy rate turned around 4%, but has since more than quadrupled to 19.7% by the end of March 2021, according to CBRE. Manhattan’s vacancy rate reached 12.5% in the first quarter of the year.
This makes a total of 16.3 million square meters vacant in the city, with more than half of the vacant subletting. Usually, there is about 1 million square feet of sublease space on the San Francisco market at any given time, but as the pandemic continues, companies stuck in leases try to recoup their losses. With an additional 1.5 million square feet of sublease space in the first quarter, there is now a total of 9.5 million square feet on the market. Leases are 45% of all available office space.
‘It’s too early to know if the office rent is the highest. “San Francisco’s direct paper rental rates fell by 1.5% in the first quarter of 2021 and optimism is rife with widespread vaccines in April and the potential for lifting restrictions in June would reach the state’s certain targets,” said Lexi Russell. director of research and analysis of CBRE. “However, with almost 26% of the office space being marketed as available, there are still barriers to jump through before rent growth seriously yields.”
SF’s vacancy rate in the first quarter also surpasses the previous record high of 19.1% at the peak of the dot-com era. The city also lost its title as the leading market for ‘giant technical leases’ for the first time, dropping from CBRE’s rankings from number 1 to number 6.
Even with the effort of vaccines, offices in San Francisco are just starting to slow down, and some of them will open with much smaller office tracks. In March, Salesforce, the city’s largest private employer, canceled its 325,000-square-foot lease at the undeveloped Parcel F tower in the Transbay suburb of San Francisco after the company announced in February that more than half of its workforce remotely or on a flexible schedule after the pandemic is over. It also rents out part of its offices at 350 St.
Other companies that have recently listed office space include Yelp, which has its 161,876-square-foot office space at New Montgomery St. 140 for rent, for rent in October 2021. WeWork closes five locations downtown and Old Navy also announced in February that it would go on strike. his office in Mission Bay and goes to the workplace of parent company Gap Inc.
When Twitter in September 104,850 square meters of its building of the 10th St. listed for subletting, it was one of the first, as the social media giant announced early in the pandemic that it would be a permanent work-from-home option for its employees. available.
Perhaps the best-known example of tech companies scaling back is when Pinterest paid $ 89.5 million to terminate its lease for 88 Bluxome, a high-rise complex to be built near the existing San Francisco headquarters.