Posted by: BayAreaComRE | January 29, 2010

San Francisco Office Market Report – Outlook Flat while Jobs and Demand Lag

Cushman & Wakefield published our Year-End 2009 Office MarketBeat report for San Francisco. We highlighted a few key points, but you can view the full report via Scribd below. Enjoy!

Unemployment in San Francisco’s Metropolitan Statistical Area (MSA) increased to 8.9% at the close of 2009, the highest in over 30 years.  This still compares favorably to California’s unemployment rate of 11.7% for the same period. The largest job losses were concentrated in banking and finance, retail, and construction industries. The technology sector, however, is contributing to new demand in the Bay Area, and will play a significant role in the recovery of the local economy.

Market Overview: The San Francisco office market struggled in 2009, with over negative 2.3 million square feet (msf) of overall absorption citywide.  Third and fourth quarters showed small positive absorption in the Central Business District (CBD), which indicates the worst may be behind us. First quarter 2009 marked the lowest amount of city-wide leasing activity in over ten years, although activity increased significantly during the second half of the year, attributable to the abundance of high-quality office space that is now available at a discount of the rents offered in 2008.

Sales activity, while still anemic, surged in the fourth quarter, particularly in the CBD, as sellers became more motivated while buyers were attracted to historically low pricing.  Transactions in fourth quarter of approximately $160.5 million composed 90.8% of total office sales volume for 2009.

Thank you to Jessica Chase of our Research Group for helping us gather this information.

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