San Francisco has the lowest office vacancy rate in the country, surpassing Houston for the top spot, according to Jones Lang LaSalle.
With more than 34 million square feet leased since the depths of the recession, much of which was leased to accommodate expansions, San Francisco will continue to see vacancy decline as many of the largest leases signed in 2011 and 2012 begin to take occupancy, JLL said in a report.
San Francisco’s office vacancy rate is now 11.3 percent, although trendy submarkets such as SoMa are closer to 5 percent. Rental rates have responded in tandem, increasing by 62.8 percent since the bottom of the market in 2010, surpassing the previous peak and expected to climb further as demand remains strong.
San Francisco is clearly leading a national trend. Stronger leasing volume and more tenants growing pumped up the volume of occupied space by more than 10 million square feet nationwide during the quarter, the largest quarterly increase since the end of 2011, researchers report in Jones Lang LaSalle’s Second Quarter 2013 Office Outlook. That absorption reined in the overall vacancy rate to 16.9 percent, marking the first time that vacancy has ducked below 17 percent in five years.
Read more: San Francisco Business Times San Francisco has lowest office vacancy in U.S.