The San Francisco Office Market Strong Class A Trophy, Weak Otherwise

Carter Kennedy, one of Colliers top Occupier Services gurus in our San Francisco office, sent me a report on their market. On the one hand, Multi-tenant Class A Trophy office buildings are doing quite well with a vacancy rate of only 4.4%. Many are net leased to strong credit companies. On the other hand, Multi-tenant Class A minus buildings are more challenged and landlords are forced to be more aggressive with their rates and incentive packages. The vacancy rate for this subgroup is over 25%. The forecast for 2022 and 2023 is continued flight to quality, trophy assets will command premium rents, and average rents are expected to decline as negative absorption continues and subleases come back on the direct market.