For seven years, vacancy and rental rates in San Francisco made it economically infeasible for developers to build new office buildings. With rents up, vacancy rates down, and large blocks of space hard to find, speculative building has returned to San Francisco.

There is currently approximately 2M square feet of office space under construction in San Francisco. Bay Area wide, that number is close to 10M.

Some of the projects in San Francisco under development include:

500,000 SF @ 555 Mission Street (Tishman Speyer)
300,000 SF @ 500 Terry Francois Blvd (Lowes Corp)
160,000 SF @ Owens Street (Alexandria)

We anticipate that top floors of view buildings will see strong tenant demand while lower floors will have more difficulty leasing as the price differentials between new construction and existing buildings are difficult to justify. Regardless, initial buildings coming online will likely benefit with the level of risk escalating for developers building subsequent buildings.