Preliminary data indicates a slight decrease in San Francisco's office vacancy rate for the fourth quarter of 2024. Real estate analysts anticipate an increase in demand for office space in the new year, although a full recovery is expected to be gradual and uneven.
In a welcome sign for San Francisco ’s economy, multiple real-estate analysts said preliminary data showed a fourth-quarter decline in The City’s office- vacancy rate , and they expected an increase in demand for space in the new year. The vacancy rate , which had risen only slightly in the third quarter of 2024 to hit a new record of 36.9%, declined to 36.7% in the fourth quarter, according to early figures released by the real-estate company CBRE.
Leasing activity for the year was on track to hit the highest level since 2019, said Colin Yasukochi, executive director of CBRE’s Tech Insights Center, in a prepared statement. He predicted that San Francisco’s office-market recovery will get additional momentum next year, though recovery will likely be “uneven and segmented” over the next several quarters, with the vacancy rate changing little overall or rising and falling. “This is part of the bottoming out process,” Yasukochi said. Given the high number of vacancies, The City will need an “extended period of high growth” to bring to a more supply-demand balanced range of 10%-15%, though the highest quality buildings will fare better than the rest of the market, he said. San Francisco’s office market has been weighed down by the rise of remote work following the COVID-19 pandemic and layoffs in the tech industry, though The City’s burgeoning artificial-intelligence sector has been a bright spot. JLL researchers similarly said preliminary numbers suggested the fourth quarter would end on a positive note, but that vacancies might rise again in the first part of the coming year before continuing to decline. They also predicted that the office market will take years to “stabilize.” The real-estate market still must absorb space to be added by large companies exiting leases, said Alexander Quinn, senior director of Northern California research at JLL, who predicted a more sustained turnaround could emerge later in the coming year, possibly in the second quarte
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