{"id":1004740699,"date":"2024-12-31T02:22:47","date_gmt":"2024-12-31T10:22:47","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004740699"},"modified":"2025-05-27T02:37:10","modified_gmt":"2025-05-27T10:37:10","slug":"san-francisco-office-construction-rebounds-amid-high-vacancy","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/","title":{"rendered":"San Francisco Office Construction Rebounds Amid High Vacancy"},"content":{"rendered":"
\n
\"Rendering<\/a>
IQHQ’s 326,000-square-foot life science project topped out in April. Image courtesy of McCarthy Building Cos. Inc.<\/em><\/figcaption><\/figure><\/div>\n\n\n

Despite a slow start in early 2024, San Francisco’s office construction activity picked up pace as the year progressed and became one of the largest in the nation. Developers are continuing to break ground on new developments, with most projects belonging to the life science sector, according to CommercialEdge data.<\/p>\n\n\n\n

In contrast, the market’s sales activity was low through 2024, on par with 2023’s trend. Nevertheless, San Francisco emerged as the priciest office market in the U.S., surpassing Manhattan in terms of average sale price per square foot.<\/p>\n\n\n\n

Second-largest pipeline in the country<\/h2>\n\n\n\n

As of November, 3.8 million square feet of office space was under construction across 20 properties in San Francisco<\/a>, representing 2.3 percent of existing stock\u2014above the national figure 0.8 percent. Among similar markets, Boston led the rankings with 3.6 percent, while San Francisco outperformed Los Angeles (0.7 percent), Manhattan (0.6 percent) and Chicago (0.3 percent). When adding office projects in planning stages, San Francisco\u2019s share reached 9 percent, second after Miami (9.4 percent) and surpassing Boston (8.6 percent).<\/p>\n\n\n\n

In terms of square feet underway, San Francisco had the second largest pipeline, after Boston\u2019s 9.3 million square feet. The vast majority of the project rising within the market are life science developments.<\/p>\n\n\n\n

Kilroy Realty\u2019s Buildings D, E and F at Kilroy Oyster Point<\/a>, slated to aid 865,000 square feet of space, is one of the largest projects under construction. A trio of life science buildings are part of the developer\u2019s 3 million-square-foot waterfront project in South San Francisco. Construction commenced in 2022 and the delivery date was pushed to the end of 2025.<\/p>\n\n\n

\n
\"The<\/a>
The office building at 30 Tanforan Ave. is part of a larger life science development. Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\n

Another notable project is IQHQ\u2019s The Spur, a 326,000-square-foot high-tech life science building at 580 Dubuque Ave. in the same submarket. Backed by a $275 million construction loan, the development topped out earlier this year<\/a> and is expected to come online in early 2025.<\/p>\n\n\n\n

Year-to-date through November, developers delivered 2.7 million square feet across 13 properties in the metro, representing 1.4 percent of total stock, while construction starts included 911,700 square feet of space across three properties\u2014accounting for 0.5 percent of total stock. <\/p>\n\n\n\n

Among notable properties that came online recently is Lane Partners\u2019 Southline Building 1, a 375,000-square-foot life science building at 30 Tanforan Ave. also in South San Francisco. The property, financed by a $373 million construction loan<\/a>, represents the first phase of Southline, an office and R&D development that will comprise up to 3 million square feet of space.<\/p>\n\n\n\n

Office-to-residential conversions in San Francisco<\/h2>\n\n\n\n

The office sector is still struggling with high vacancies and office-to-residential conversions have emerged as an attractive option. Recently, CommercialEdge launched the Conversion Feasibility Index<\/a>, a Yardi-powered tool that measures a building\u2019s potential for a residential makeover.<\/p>\n\n\n\n

The CFI score has three tiers, with Tier I office properties being the most suitable candidates. San Francisco had 112 properties\u2014totaling 11 million square feet\u2014in the Tier I category. Additionally, the metro had 295 office building in the Tier II category, totaling nearly 36.3 million square feet.<\/p>\n\n\n\n

Work has begun on the repurposing of the historic Humboldt Bank Building. In October, Forge Development Partners started the conversion of the 1908-built mid-rise totaling 91,804 square feet. The developer plans to invest $70 million in the reimagining of the office building into a 124-unit residential community. The Seligman Group is the owner of the property that bears a CFI score of 91 points.<\/p>\n\n\n\n

Prices high, low investment activity<\/h2>\n\n\n\n

Year-to-date through November, San Francisco\u2019s office sector saw $747 million in deals, with 29 properties totaling nearly 1.9 million square feet changing hands. The metro continued last year’s limited sales activity<\/a>: in 2023, transactions amounted to $722 million and 2.3 million square feet.<\/p>\n\n\n

\n
\"Sand<\/a>
Sand Hill Commons is a two-building office campus that recently changed hands. Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\n

Among gateway metros, San Francisco\u2019s total sales volume surpassed only Seattle\u2019s ($687 million), while Manhattan led the nation with $3.8 billion in deals.<\/p>\n\n\n\n

One of the priciest sales in San Francisco this year was the $222.2 million acquisition of Sand Hill Commons<\/a>, a 133,000-square-foot, two-building office campus in Menlo Park, Calif. The buyer was Norges Bank Investment Management, that acquired a 97.7 percent ownership stake in the property from Clarion Partners and Invesco Real Estate.<\/p>\n\n\n\n

Office properties changed hands at an average sale price of $384 per square foot\u2014significantly above the national average of $179 per square foot. Among gateway markets, San Francisco emerged as the priciest office market, outperforming the usual leader Manhattan ($379 per square foot), that was followed by Miami ($376 per square foot), Los Angeles ($355 per square foot) and Washington, D.C. ($213 per square foot).<\/p>\n\n\n\n

San Francisco’s vacancy rate highest in the U.S.<\/h2>\n\n\n\n

San Francisco\u2019s office vacancy rate clocked in at 27.7 percent as of November\u2014surpassing the national figure of 19.4 percent and marking a 400-basis-point increase. Tech markets are posting some of the highest rates in the country, with San Francisco and Austin ranking first.<\/p>\n\n\n

\n
\"The<\/a>
The Monadnock Building is a historic office building in San Francisco. Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\n

In contrast, one of the lowest rates were registered in similar markets, such as Miami (14.4 percent), Los Angeles (15.7 percent), Manhattan (16.7 percent) and Boston (16.8 percent). The only gateway metro with a significant increase in vacancy was Seattle, that recorded a 25.8 percent figure.<\/p>\n\n\n\n

In May, Google gave up 300,000 square feet<\/a> of office space at One Market Plaza, a two-building office complex totaling 1.6 million square feet in San Francisco. Nevertheless, notable office leases transpired recently in the metro. Among them is Alexandria Real Estate Equities Inc.\u2019s 258,581-square-foot, long-term deal with Vaxcyte Inc<\/a>. The company has been an anchor tenant at Alexandria Center for Life Science, a two-building property in San Carlos, Calif.<\/p>\n\n\n\n

Flex office providers increasing operations in the metro<\/h2>\n\n\n\n

San Francisco\u2019s coworking market<\/a> comprised 3.7 million square feet of space as of November, more than in Miami and Seattle, that had 2.9 million square feet each. The share of flex office space as percentage of total leasable office space in the metro reached percent 2.2 percent, above the national figure of 1.9 percent.<\/p>\n\n\n\n

The flex office provider with the largest footprint in the metro remained WeWork, with operations totaling 736,795 square feet. The companies that followed were Gateway Labs by Lilly (438,339 square feet), Regus (337,544 square feet), Studio by Tishman Speyer (237,947 square feet) and Spaces (186,402 square feet).<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Find out how market fundamentals are shifting, according to CommercialEdge data.<\/p>\n","protected":false},"author":2991,"featured_media":1004740700,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21782,21825,22251,52420,21747,1609,15],"tags":[51047,50674],"class_list":["post-1004740699","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development","category-finance","category-in-focus","category-market-updates","category-office","category-san-francisco","category-west","tag-marketupdate","tag-commercialedge"],"acf":[],"yoast_head":"\nSan Francisco Office Construction Rebounds Amid High Vacancy - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"San Francisco's office sector recovered in terms of under-construction pipeline and sale prices per square foot, CommercialEdge shows.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"San Francisco Office Construction Rebounds Amid High Vacancy\" \/>\n<meta property=\"og:description\" content=\"San Francisco's office sector recovered in terms of under-construction pipeline and sale prices per square foot, CommercialEdge shows.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2024-12-31T10:22:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-05-27T10:37:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/12\/Spur-Phase-One-e1734097845992.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"541\" \/>\n\t<meta property=\"og:image:height\" content=\"405\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Simona Tudose\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/\",\"name\":\"San Francisco Office Construction Rebounds Amid High Vacancy - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/12\/Spur-Phase-One-e1734097845992.jpg\",\"datePublished\":\"2024-12-31T10:22:47+00:00\",\"dateModified\":\"2025-05-27T10:37:10+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/4659e2337f06b61cefc6b0b897d183a4\"},\"description\":\"San Francisco's office sector recovered in terms of under-construction pipeline and sale prices per square foot, CommercialEdge shows.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/san-francisco-office-construction-rebounds-amid-high-vacancy\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/12\/Spur-Phase-One-e1734097845992.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/12\/Spur-Phase-One-e1734097845992.jpg\",\"width\":541,\"height\":405,\"caption\":\"Image courtesy of McCarthy Building Cos. 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