During the second quarter, San Francisco’s office market showed signs of stabilization, as the velocity of new vacant space slowed, and tenants made significant space commitments. Rippling’s new office is 4 times larger than the one they are vacating, Scale AI leased 3.65 times more space, and law firm Wilmer Hale is doubling in size. Vacancy remained flat at 31.8 percent, though it increased by 5.5 percent year-over-year. The large volume of available space continues to exert downward pressure on rents. In a contrarian outcome, the availability of Google’s 300,000 square feet of expensive office space at 1 Market St. caused the weighted average CBD asking rates to rise by $0.49 quarter-over-quarter yet are still down $1.97 year-over-year. Year-to-date net absorption stands at negative 285,000 square feet despite significant move-ins this quarter by Anthropic (230,000), The City of SF (157,000), Adyen (148,000), and Rippling (123,000) in the second quarter.
Under the umbrella of Senate Bill 76, the Mayor’s Office created California’s first Entertainment Zone (EZ) in San Francisco’s Financial District. Now, during special events such as live entertainment, restaurants and bars are allowed to sell open alcoholic drinks. Many neighborhoods expressed interest in expanding the program. Other efforts to stimulate San Francisco’s business recovery include the “Vacant to Vibrant” program, which provided financial support to retail shops, helping them transition from temporary pop-ups to permanent leases.
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