Reviving San Francisco Office: Lower Rents and AI Companies Fueling a Rebound?
The recent sell-off of office properties in San Francisco sent waves throughout the gateway office market, but it appears that the tide may be turning. Thanks to more favorable lease rates, tenants who were once considering fleeing the area in search of more affordable terms are finding themselves reconsidering, sparking a resurgence in activity for office space.
According to data from VTS, search activity has surged by 40% in 2023 as compared to a year ago. New buyers are entering the market, offering lower rents than comparable spaces while maintaining profitability. Notably, the rise in demand is also coming from AI businesses, with six companies in the industry leasing a total of 150,000 square feet this year. San Francisco, once known for some of the highest rents in the country, is becoming competitive again as prices come down.
As more properties become delinquent, reduced valuations are leading to opportunities for both buyers and tenants in the city.
Original Publication Credit: Wall Street Journal
Image Credit: Downtown SF