Year Ends Pretty Much Where It Started In San Francisco

The San Francisco office market ended pretty much where it started. In February 2002 the total office vacancy stood at 18.5%, and at the end of 2002 it stood at 18.12%. Overall rental value, including all classifications of buildings, remained unchanged at $21.58 per square foot, fully serviced.

Overall, the year ended with 16,126,709 square feet available, including direct space and sublease space. With sublease space the overall vacancy ended at 24.63%, down slightly from 25.75% at the beginning of the year.

San Francisco did see a further tightening of space under 5,000 square feet in Class A office buildings which ended at 5.5%, down from 8% in January. Class B and C properties fewer than 5,000 square feet also saw a reduction in overall vacancy from 12% to 8.5%. Rental rates remained flat in this sector.

Spaces over 10,000 square feet saw rental rates lower by 15% on average. The total average rent including Class A, B and C over 10,000 square feet was $18.50 per square foot, fully serviced.

The average size transaction in San Francisco was 2,800 square feet down from 3,200 square feet in 2001.

Operating expenses jumped dramatically by an average of 8% due to increases in energy, security and insurance costs.

The average cost to build out office space from shell also went up from $42.00 to $48.00 per square foot.