After Big Deliveries, San Francisco Office Pipeline Slows

San Francisco’s office sector experienced mixed performance across several key metrics year-to-date through November, Yardi Matrix data shows.

While U.S. construction activity hit a historic low, San Francisco’s pipeline also shrank significantly to one of the smallest in the country. The tighter development pace is due to long-time under-construction projects being brought online, adding to the market more than 3 million square feet that has yet to be absorbed.

Shrinking pipeline reflects pullback in office construction

Year-to-date through November, San Francisco’s office sector had 1.4 million square feet of space underway across seven projects. This represented 0.7 percent of existing stock—on par with the national average and ahead of Manhattan (0.6 percent) and Washington, D.C. (0.2 percent). Miami led all gateways at 2.3 percent, followed by Boston at 1.8 percent.

San Francisco’s pipeline ranked seventh among gateway markets, ahead of only Washington, D.C., where developers had 856,971 square feet under construction. Boston continued to lead with 5.4 million square feet underway, while Manhattan followed with 2.7 million square feet. Although demand persists for selected new projects, overall development activity in 2025 has reached historic lows, allowing the market time to absorb recent deliveries.

For competitive office projects specifically, San Francisco had just 533,537 square feet underway, representing only 0.3 percent of inventory—one of the smallest pipelines among the top 25 office markets. Despite this sharp pullback in construction, planned or proposed projects accounted for 3.5 percent of inventory.

The metro’s five largest projects total a combined 1.2 million square feet. The largest is Potrero Power Station’s Block 2, a 278,230-square-foot development that broke ground in August. Associate Capital is developing the project as the centerpiece of the $2 billion, 29-acre Dogpatch Power Station redevelopment, replacing the former PG&E power plant with 1.6 million square feet of office and research labs, 110,000 square feet of retail, and 2,601 homes.

Long-running projects delivered, pushing vacancy strain

San Francisco started 2025 strong in terms of construction activity, ranking third in the nation during the first two months of the year. Activity then fell sharply as several under-construction projects finally delivered, reflecting the metro’s past construction surge sparked by lab space demand.

Developers completed 3.3 million square feet across 12 properties as of November, marking an 8.4 percent year-over-year increase in office completions. The added inventory is expected to further put pressure on the office market’s vacancy, while Yardi Matrix data shows no new construction starts year-to-date.

Major deliveries include the 865,000-square-foot Phase II of Kilroy Oyster Point, a life science project that broke ground in 2021 and came online this March. The $940 million addition is part of Kilroy Realty Corp.’s 3 million-square-foot Kilroy Oyster Point campus, a waterfront biotech development in South San Francisco, one of the largest life science hubs in the country.

Another major completion is the coming online of a 334,300-square-foot life science building at 580 Dubuque Ave., also in South San Francisco. IQHQ developed the project with a $275 million construction loan. The eight-story structure has been in the works since 2022. It topped out last year and reached completion in October.

The building is the first phase of The Spur District, IQHQ’s planned 2.6 million-square-foot office and lab mega campus. The developer has requested a 10-year extension and submitted plans for an 857,000-square-foot second phase—an unusual move given current lab vacancies.

Investment activity slow, but prices high

San Francisco’s office market generated $1.3 billion in sales year-to-date through November. The metro ranked ninth nationwide and fifth among gateway markets.

Manhattan led all markets with $7.3 billion in sales, followed by the Bay Area at $4.4 billion. Miami posted the lowest investment activity among gateways with $654 million in volume.

San Francisco office properties traded at an average of $286 per square foot—well above the national average of $190. The metro remained one of the priciest office markets in the country, ranking fourth behind Manhattan ($514 per square foot), the Bay Area ($386), and Miami ($360).

The largest deal year-to-date was Peninsula Land & Capital’s $105 million purchase of 505 Montgomery St. in the Financial District. The 350,786-square-foot building sold by Germany-based DWS Group previously changed hands in 2005, when it was included in a $358.5 million portfolio sale, according to Yardi Matrix.

The second-largest transaction was Shorenstein’s $91.6 million purchase of 1100 Park Place, a 127,633-square-foot property in San Mateo, Calif. The acquisition was part of a broader deal including an adjacent office property and a retail building, totaling $144.5 million.

AI leasing gains momentum, vacancy holds high

San Francisco office space had a vacancy rate that reached 25.7 percent in November—far above the national average of 18.5 percent, though down 250 basis points year-over-year.

The metro posted one of the highest vacancy rates among the top 25 U.S. markets. Only Austin (26.8 percent) and Seattle (26.6 percent) recorded higher figures. Miami had the lowest vacancy nationwide at 11.9 percent, followed by Manhattan (13.4 percent) and Los Angeles (14.4 percent).

Average asking rents in San Francisco were $65.03 per square foot—more than double the national average of $32.77. The metro ranked second among the nation’s most expensive office markets, behind Manhattan’s $68.36 per square foot. Chicago posted the lowest average rent among gateway markets at $28.09 per square foot.

Recent leasing activity includes Databricks’ full-building deal totaling 305,000 square feet at 200 W. Washington Ave. in downtown Sunnyvale, Calif. The AI company will move in next year at the recently completed property.

In May, Coinbase signed a 150,000-square-foot lease for its new headquarters at Mission Rock Building B, a 313,952-square-foot property owned by Tishman Speyer and the San Francisco Giants.

Coworking sector keeps steady

As of November, San Francisco’s coworking inventory totaled 3.8 million square feet across 150 locations, according to CoworkingCafe. Flex space represented 2.2 percent of the metro’s leasable office inventory—matching the national average and Boston’s figure. Chicago led gateway markets at 2.7 percent, followed by Manhattan at 2.5 percent.

By inventory, Manhattan remained the largest flex market at 12.4 million square feet, with Chicago following at roughly 9 million square feet. San Francisco ranked sixth among gateways.

WeWork remained the metro’s largest provider with 736,795 square feet, followed by Regus (377,255 square feet), Studio by Tishman Speyer (256,759), Spaces (217,956), and MBC BioLabs (206,545).