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2/02/10
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Here’s a brief 4th quarter 2009 report on the San Francisco office market, provided by Michael Tobin, a Partner at GVA Kidder Mathews and a long-time industry veteran.
Absorption: Citywide overall net absorption was +191k sf in the 4th quarter, bringing the 2009 overall net absorption to a negative 2.35 m sf. The CBD's share was almost 50% of this total.
Vacancy: CBD overall vacancy rate (both direct and sublease space) fell to 12.9% in the 4th quarter, a 0.6% change, while the Class A vacancy rate fell similarly to 13.1%. Vacancy rates fell fractionally citywide, with the largest drop in the SOMA District at 2.2%.
Rent: Asking rents continued their citywide decline in the 4th quarter, falling citywide 1.1% to $33.18 and 0.9% to $35.83 in the CBD. Class A rents fared marginally better at $38.33 (a 0.6% decrease).
Activity: CBD and new citywide leasing activity remained virtually constant in the 4th quarter. New leases totaled 817k sf in the CBD and 1.1 msf citywide, less than a 0.07% variance.
Forecast: In all likelihood, there will be no true market improvement until international / national / local economies gain traction and produce demand for products / services, thus producing "jobs." The local economy has been hammered by losses in the tourism, financial, banking and professional service segments. Only the Life Sciences and Technology areas have cushioned the blows. Though the San Francisco office market has stabilized the last two quarters, it will not show significant growth until the economy strengthens.
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