Real Estate

Office Rents in San Francisco Ended 2018 at a Record High

Driven in part by the delivery of a record 3.7 million square feet of shinny new office space over the past year, all of which was delivered pre-leased, the average asking rent for office space in San Francisco ticked up 1.1 percent in the fourth quarter of 2018 to an all-time high of $75.57 per square foot per year, which is 6.4 percent above its mark at the same time last year.

At the same time, the average asking rent for older Class B space in the city inched up 0.5 percent in the fourth quarter $66.14 per square foot per year, which is 4.6 percent higher on a year-over-year basis but roughly even with mid-2016 pricing.

The overall vacancy rate in the city ended the year at a below-average 6.4 percent, which represents 5.3 million square feet of vacant space, 1.2 million square feet of which is technically leased but available for sublet (up from 860,000 square feet of leased but vacant space in the previous quarter).

And while there remains another 3.1 million square feet of office space currently under construction in the city, roughly two-thirds of which will be delivered, pre-leased, by the end of the year, the estimated cumulative need of tenants seeking new office space in San Francisco ended the year at 5.2 million square feet, down 18 percent from the third quarter but 17 percent higher versus the same time last year.




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