The estimated injection of 1.4 million square feet of sublease space doesn’t place San Francisco back to dot bomb dynamics
From the 4th Quarter of 2000 to the 1st Quarter of 2002, San Francisco’s office market experienced an increase in total vacant space of over 9.2 million square feet.
February 25, 2020
- Asking rents dropped by more than half just as 2 million square feet of new office space was completed and entered the market.
- As the dot-com boom became the dot-com bomb, 4.3 million square feet of sublease space was added to the market. Sublease space accounted for 7.8% of total supply or approximately 5.2 million square feet in the 1st Quarter of 2002.
- Compare this to today where approximately 3.5 million square feet of sublease space will be available by this summer, which represents approximately 4.4% of total existing supply. Another 2.5 million square feet of new space is set to be delivered in the next two years of which 100% has been preleased.
- Moreover, the current injection of sublease space does not reflect a market implosion akin to 2001 but there is the potential for a lease correction in the third quarter as sublease space undercuts available direct space.
Source: U.S. Bureau of Economic Analysis, JLL Research