San Francisco Leasing Rebounds: Space Falls, Rents Rise
January 21, 2011
By J.K. Dineen

A buoyant technology industry drove the San Francisco leasing market to a second straight quarter of growth as tenants grabbed about a half million square feet more than they gave up.

Led by much-hyped companies like Zynga and Twitter, San Francisco’s South of Market tenants accounted for half the city’s growth; that tech-heavy neighborhood now has a total vacancy rate of 9.5 percent, including sublease space. In contrast, the sluggish north financial district has a vacancy rate of 16 percent, with 4.8 million square feet of vacancy, according to brokerage Jones Lang LaSalle.

That is prompting landlords to push rates significantly higher. Rents that had fallen from $50 a square foot in 2007 to $35 in 2009 have bounced back a bit.

... The tenant brokerage Studley, which tracks all available space, including space still occupied, argues that San Francisco’s overall availability rate is actually 18.4 percent.

“Even through technology is booming in a very positive way for the city, it has not benefitted the central business district,” said Steve Barker, managing director of Studley’s San Francisco office.

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