This still likely isn’t the peak, though.
FILE: The San Francisco office vacancy rate has hit record highs each quarter for nearly two years.San Francisco’s office vacancy rate climbed even higher in the third quarter of 2023, according to new preliminary data recently released by commercial real estate firm CBRE.from 31.6% to 33.9%, a new record high for the city, which has hit record highs each quarter for nearly two years.
Despite the grim numbers, experts say demand for office properties has been rising — not enough to offset vacancies yet, but things are at least improving. Companies that decided to abandon leases or let them expire due to layoffs or changes in remote work appear to be mostly done doing so, according to Colin Yasukochi, executive director of CBRE’s Tech Insights Center. With that cycle possibly winding down and an uptick in demand, the numbers may hit their peak toward the middle of 2024.
The average asking rent for office space dropped lower than the previous quarter, falling to $71.83 per square foot from $73.59. That’s still a small decline compared to past commercial real estate slumps. After the dot-com bust, Yasukochi said rents declined about 70%, while they dipped about 30% after the Great Recession. Prices are only about 19% lower than peak prices pre-pandemic.
“We have to start somewhere and this seems to be an inflection point where we're starting to see things at least get a lot less bad and a little better at the same time,” Yasukochi said.
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