San Francisco office vacancy falls, but market estimates differ

The market shows improvement

CBRE estimated San Francisco office vacancy at 29.2% in the second quarter of 2026 and recorded approximately 963,980 square feet of positive net absorption. Its average asking rent was $72.96 per square foot per year. [1 · CBRE]

Kidder Mathews reported a vacancy rate of 27.2% for the same context. The figures should not be combined without accounting for methodology, but both datasets show improvement from a weaker period in the market. [1 · CBRE] [2 · Kidder Mathews]

Why office demand is not broad employment growth

AI companies are again placing value on intensive in-person collaboration and high-quality buildings. This helps the best office properties even while overall vacancy remains high. Smaller teams, however, mean leasing a prominent office does not necessarily create the broad employment growth associated with the earlier wave of major technology companies. [2 · Kidder Mathews]

The main qualification is comparability: vacancy estimates differ because of coverage and calculation methods. Tracking change within the same series is more reliable than treating the difference between 27.2% and 29.2% as a direct contradiction. [1 · CBRE] [2 · Kidder Mathews]

What would confirm a recovery

A durable recovery requires more than one quarter of positive net absorption. Important signs include several consecutive periods of declining vacancy, higher effective rents after concessions, less sublease space and demand spreading beyond a small group of premium buildings. [1 · CBRE] [2 · Kidder Mathews]

Leased space also needs to be distinguished from employees’ actual daily presence. Companies may rent a central office to support culture and hiring while retaining hybrid work. Office statistics are useful indicators of corporate confidence but do not directly measure city footfall or new jobs. [2 · Kidder Mathews]

The positive signal would strengthen if vacancy, sublease availability, effective rent and the volume of new long-term leases improved together. [2 · Kidder Mathews]