In San Francisco, occupiers with impending lease expirations are turning to short term renewals
Mandated shutdowns have dramatically slowed activity in the San Francisco office market
August 17, 2020
Quarterly leasing and renewals
- In the latest expansionary cycle spanning from 2011 to 2019, the San Francisco office market saw a quarterly average of 2.5 million square feet of gross transactions executed, with renewals accounting for 24.1 percent of all transactions.
- During the Financial Crisis where average asking rents fell 16.7 percent, quarterly leasing volume was down 42.7 percent, with tenant renewals accounting for 36.5 percent of all transactions executed.
- In Q2 2020, the San Francisco gross office leasing volume dropped 42.2 percent quarter-over-quarter and was the lowest level since Q1 2009. Renewals accounted for 54.4 percent of all transactions executed.
- In addition to tenants with impeding lease expirations, firms that were previously in the market for additional office space are executing discounted short term renewals as a temporary stopgap for their real estate needs.
- As month six of shelter-in-place approaches, touring and expansionary leasing activity remain muted in San Francisco as tenants continue their deliberate wait-and-see approach for more economic certainty.
- Approximately 3.00 million square feet of new sublease space, or 53 percent of total sublease availability, has been introduced into the San Francisco market since March 16th, the day shelter-in-place began. Total sublease space in San Francisco currently stands at 5.6 million square feet.