According to the San Francisco Chronicle, the city squeaked out a new record for the amount of leased office space in 2018, as the deals totaled 11.9 million square feet, enough space for nearly 80,000 employees. The old record of 11.8 million square feet of leased space was notched in 2014. Tech firms are getting most of the credit by accounting for around 62 percent of all leasing activity in 2018, the highest percentage since 2014. All of this is happening as office rents rose by 153 percent to more than $81 a square foot.
“I still see it as well diversified. Essentially, all industries have a growing tech component. And because of the deep talent pool in the Bay Area and the urban environment this talent has wanted to live and work in, San Francisco has remained very popular,” said Robert Sammons, Northwest research director at brokerage Cushman & Wakefield.
However, many non-tech companies have been shifting growth to cheaper cities, said Sammons. “Today more professional services firms tend to reorganize — occupying less space and also moving back-office workers out of expensive markets,” said Sammons. Market observers expect fewer large office deals in 2019, because of minuscule availability and a dearth of new office projects. The citywide office vacancy rate fell from 4.7 percent at the end of 2017 to 4.1 percent today — the lowest level since the end of 2000.
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