Two Different Sides of the San Francisco Bay

Headlines in the May 21, 2026, SF Registry read “San Francisco captures 80% of all U.S. AI Venture Capital of Office Leasing Snaps Back”, ‘Ai companies have leased 10.6 million square feet of office space in the city since 2019, more than any other market in the world”.   However, the San Francisco office vacancy is still one of the highest in the country, currently around 30%. And while San Francisco is making positive news, out in the suburb’s things are not quite as rosy, A recent older Class A 60,000 square foot office building in Pleasanton, 60000 Stoneridge, sold for $92/square foot. Great location, but vacant, and out in the suburbs where the cost of tenant improvements for new tenants might be in the $60-80/rsf range and full-service rents of $3.00/rsf ($36.rsf annual) asking, with significant free rent which could lower this to $2.94/rsf over five years including a 3% annual rent increase…then take into account the brokerage commissions, the monthly operating expenses of say $1.25/rsf…even at 0% interest on the cost of tenant improvements, amortizing $60 over five years works out to $1.00/rsf per month, and you end up with a  monthly net rent of $0.70 pr less…for Class  A office space!  And this assumes you find a credit tenant in a timely manner, which is not always a given these days.  I just hope office tenants appreciate how great they have it these days…