San Francisco’s Office Market Still Strong, Despite Challenges
Investment sales and average prices propelled the market among the country's top performers, according to Yardi Research Data.
San Francisco’s office sector continues to perform well across several metrics, according to Yardi Research Data. Investment sales surpassed the $1 billion threshold year-to-date as of June, placing the metro in the top 10 U.S. office markets. Despite discount deals increasing nationwide, the City still had some of the highest prices per square foot in the country.
Meanwhile, the development pipeline kept steady as no new project groundbreakings were registered in the first half of the year. Construction activity carried on at a brisk pace, with completions marking a 37.3 percent year-over-year jump. As a result, the metro’s office vacancy rate remained one of the most elevated in the nation.
Strong sales activity, high prices in San Francisco
During the first half of 2025, San Francisco’s office sales volume amounted to $1.1 billion, placing the metro on the sixth spot among the top 25 U.S. office markets and the fourth among gateway markets.
Washington, D.C., had the largest sales volume in the country, totaling $3.1 billion, while Manhattan ($2.8 billion) and Los Angeles ($1.4 billion) rounded out the top 3. Seattle was at the opposite pole, with $275 million in transactions.
As of June, office properties in the metro changed hands for $237 per square foot on average—above the national $189 per square foot. San Francisco remained one of the most expensive metros in the nation, also ranking fourth among its peers.
Manhattan led the gateway markets with $437 per square foot, followed by Los Angeles ($289 per square foot) and Miami ($255 per square foot). By contrast, Chicago had the smallest sale prices, averaging $57 per square foot.
One of the biggest transactions that closed since the start of 2025 was Ridge Capital Investors’ $76.3 million purchase of 33 New Montgomery St., a 240,134-square-foot office mid-rise. Barings sold the asset at a considerable smaller price than the one of its previous 2014 trade, which amounted to $148.9 million.
In another significant deal, LendingClub Corp.’s $74.5 million acquisition of 88 Kearny St., a 1980s-vintage building in downtown San Francisco. Nuveen Real Estate sold the property after 26 years of ownership.
San Francisco’s pipeline still strong
San Francisco’s under-construction pipeline included nearly 2.1 million square feet of competitive space across nine properties, representing 1.1 percent of existing stock—way above the national average of 0.6 percent. Among gateway markets, Boston (2.3 percent) and Miami (2.0 percent) occupied the first and second spot, respectively; all the other metros were below the national average for pipeline size as a percentage of stock.
In terms of square footage, San Francisco ranked sixth among gateway markets. Boston led, with nearly 6.8 million square feet underway, while Manhattan (5.5 million square feet) and Seattle (4.7 million square feet) followed. The smallest under-construction pipeline belonged to Washington, D.C. (782,606 square feet).
One of the largest projects underway in San Francisco is IQHQ’s Spur Phase One, a 330,300-square-foot life science development at 590 Dubuque Ave. in South San Francisco, Calif.
The developer broke ground in 2022 on the building that’s part of the Spur district, a 2.6 million-square-foot office and lab development. Backed by a $275 million construction loan, Phase One topped out in 2024 and is expected to reach completion this year.
The second-largest development is Avia Labs at Millbrae Station, a 315,000-square-foot building at 210 Adrian Court in Millbrae, Calif. Owned and developed by Longfellow Real Estate Partners, the all-electric life science project broke ground in 2023 and its delivery is estimated for the end of August this year.
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Meanwhile, office deliveries totaled more than 1.7 million square feet across five properties, accounting for 0.9 percent of San Francisco’s existing stock. The volume was up by 37.3 percent year-over-year.
The largest completion involved the second phase of Kilroy Oyster Point, a life science campus developed by Kilroy Realty in South San Francisco, Calif. Comprising 865,000 square feet across a trio of buildings, this $940 million development, part of the firm’s 3 million-square-foot waterfront project, broke ground in 2021.
San Francisco’s rents, second-highest in the U.S.
The metro’s office vacancy rate remained elevated, clocking in at 27.7 percent in June—way above the national average of 19.4 percent. The index, marking a 230-basis-point increase over the past 12 months, was the second-highest in the country after Austin’s 28 percent.
Among gateway markets, Seattle also recorded one of the highest vacancies, at 26.7 percent, while the other metros had rates below the national average. Namely, Manhattan registered a 15.2 percent vacancy, while Miami’s 14.3 percent was the lowest among the top 25 U.S. markets.
Meanwhile, San Francisco’s listing rates stood at $63.01 per square foot—nearly double the national average of $32.87 per square foot. The market was the runner-up for the most expensive rents nationally, outperformed only by Manhattan ($67.97 per square foot).
Gateway markets that followed include Miami ($56.97 per square foot) and Boston ($46.06 per square foot). Chicago recorded some of the most affordable rents, averaging $27.82 per square foot.
Notable leases signed in the first half of 2025 include The U.S. Department of Veterans Affairs’ 57,000-square-foot commitment at 1950 Franklin St. in Oakland, Calif. The deal, which closed in May, marked the biggest office lease in the city since 2021.
During the same period, crypto giant Coinbase negotiated a 150,000-square-foot headquarters lease at Mission Rock Building B. The commitment resulted from the company’s decision to establish a new central office after four years of remote work.
San Francisco’s coworking market holds its own
San Francisco’s coworking market comprised 3.6 million square feet spread across 138 locations as of June, ranking sixth for square footage among gateway markets. Manhattan occupied the first position, with nearly 11 million square feet, while Chicago was the runner-up with 8.2 million square feet.
The metro’s share of flex space as a percentage of total leasable office space clocked in at 2.1 percent—slightly above the national average of 2 percent. Miami led this ranking with 3.8 percent, followed by Chicago with 2.5 percent.
The market’s top 5 flex office providers remained unchanged since our previous market update: WeWork led, with locations totaling 736,795 square feet, followed by Regus (377,255 square feet), Studio by Tishman Speyer (256,759 square feet), Spaces (217,956 square feet) and Industrious (160,998 square feet).
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