A remarkable thing is going on in the San Francisco office market. I first saw signs about a year ago, as companies reported it was newly less straightforward to find office space, and, meanwhile, erstwhile Florida escapees began returning. Now, however, it is a tenancy stampede, with major new AI-related leases being signed, and former Floridians everywhere.
Some quick hits on what's going on, and what it means:
Where We Were
- In 2023, San Francisco held the highest office vacancy rate in the U.S., peaking ~34%.
- Pandemic-driven remote work, tech layoffs, and sublease glut left downtown hollowed out.
- The city became a synonym for post-COVID office collapse.
Where We Are
- Vacancy has fallen to ~23% in 2025, now matching major metros like Chicago, Los Angeles, and D.C.
- AI firms — notably OpenAI, Vercel, and Harvey AI — have leased >5 M SF since 2023.¹
- Sublease availability is down 30%, signaling the first sustained tightening in years.