Having inched down to just under 20 percent at the end of last year, the effective office vacancy rate in San Francisco ticked back up to a pandemic high of 21.7 percent in the first quarter of 2022, representing 18.7 million square feet of vacant office space in the city, including 5.3 million square feet of space which is technically leased but sitting vacant and 13.4 million square feet of un-leased space, according to data from Cushman & Wakefield.
As a point of comparison, there was under 5 million square feet of vacant office space in San Francisco prior to the pandemic with a vacancy rate of 5.7 percent, versus a long-term average of around 12 percent. And as we outlined last quarter, foreshadowing the first quarter rise:
“Despite the drop in the overall vacancy rate at the end of 2021, the amount of un-leased office space in San Francisco actually ticked up, both in the absolute and relatively, with 1.3 million square feet of space that was being offered for sublet in the third quarter having been leased, reoccupied or returned to the market as directly vacant space. And total leasing activity actually dropped from the third to fourth quarter of last year, with “a scarcity of large transactions,” a push back of return to office dates (yes, the surge in COVID cases is meaningful, beyond increasing hospitalizations and deaths) , and under 1 million square feet of space having been leased, including sublets, for a negative net absorption.”
And in terms of active demand for the 18.7 million square feet of vacant space, Cushman & Wakefield is currently tracking active requirements for 4.9 million square feet, which was down from the fourth quarter of last year and 33.8 percent below the pre-pandemic demand.