San Francisco's office vacancy rate fell again from July through September, according to quarterly reports from two big commercial real estate firms. Both credit artificial intelligence companies. The firms use different methods, so their numbers don't match.
CBRE: 27.7%
CBRE put vacancy at 27.7% in the third quarter, the San Francisco Examiner reported. That is down 1.5 percentage points from the prior quarter and from a peak of 36.9% in the third quarter of 2024. The firm counted 1.3 million square feet of positive net absorption, meaning more space was leased than vacated, and said 2026 could set an annual record if the pace holds. "Large lease transactions by expanding AI companies have been the catalyst for accelerating vacancy decline," said Colin Yasukochi of CBRE. He said 20 leases of 100,000 square feet or more had closed this year, with nine more pending, which would beat the 2018 record.
Cushman & Wakefield: 29.3%
Cushman & Wakefield's Q3 report puts vacancy at 29.3%, down 50 basis points from the second quarter and down from 33.8% a year earlier. That is the lowest since the third quarter of 2023. The firm counted just over 405,000 square feet of positive absorption for the quarter, its sixth positive quarter in a row, and nearly 2.9 million square feet so far this year. Average asking rent rose to $72.68 per square foot, the biggest quarterly jump since early 2020. It says AI companies have leased just over 4.4 million square feet through three quarters, more than double their total for all of 2025.
The SoMa deals
Both firms highlight the same South of Market deals. Sierra expanded to 351,000 square feet at 185 Berry St., the quarter's largest deal. Brex took all 198,000 square feet at 270 Brannan St. Cognition subleased the former Cruise space at 333 Brannan St. Airbnb signed a new lease at 850 Brannan St. CBRE said SoMa vacancy fell 5.3 points and asking rent there rose to $82.57. Mission Bay rents hit a record of almost $131 per square foot.
There is still no new office construction underway. CBRE said it was the 10th straight quarter without a project delivered or under construction, though 530 Sansome St. and 50 First St. are aiming to break ground within a year.