San Francisco Office Market Heating Up!

According to Derek Daniels, Regional Research Director for Colliers International, “In terms of the latest on tenant touring demand, “There are close to 7 million square feet of active office tenant requirements in San Francisco. This includes large blocks requirements seeking to expand. Ai and related industries are driving growth in the San Francisco office market and remain the primary sector committing to net growth in footprint.”  “Privately backed artificial intelligence startups have leased more than 3.1 million square feet in the Bay Area this year, a sevenfold jump since 2020 — unmatched in any other U.S.” BizJournal 8/21/25  “   “As one illustration of the AI boom, San Francisco’s office market is rebounding faster than most U.S. metro areas. “This recovery is happening right now,” Derek Daniels, Colliers ’regional research director for the Bay Area, told the Business Times. “The office market is back” ConnectCRE 9/1/25 “  At 6.6 million square feet, the city still has more than three times the sublease space it had a decade ago. But those big deals, along with others that converted the temporary offices to long-term commitments, are reviving blocks of the city once seen as symbols of the slump. Fewer empty offices suggest San Francisco’s broader economy is stabilizing after years of tech pulling back. Investors betting that the office market has bottomed have returned. Vacancy is falling. And companies filling the void are providing a new source of demand. The pullback isn’t unique to San Francisco. Nearly 80% of U.S. office markets have seen sublease availability fall over the past year, led by steep declines in Chicago, Seattle, Dallas and San Francisco, according to Avison Young. Nationwide, sublease space is down 11%. Several forces are behind the turnaround, said Nigel Hughes, senior director of market analytics at CoStar Group. Chief among them: fast-growing AI firms, flush with cash and racing to expand. Subleases appeal because they’re often fully built-out offices, allowing companies to move in quickly. And they come at a steep discount — typically about half the cost of a direct lease, Hughes said. The broader market is also strengthening. Companies have already signed more than 6million square feet of leases through June, said Derek Daniels, Colliers’ regional research director for the Bay Area. If that pace continues, this would mark the busiest year since 2018. “What you’re seeing is the return of large block leasing driven by AI,” Daniels said. “That is a measure of how the market is improving.” San Francisco Business Times 9/1/25