This year will end with an office vacancy factor of 18% in all direct space available. This is exactly where we were one year ago and gives reason to hope that the San Francisco office market is starting to rebound. It comes with total leasing of most sublease space and lower vacancy rates for spaces under 5,000 square feet.
At the beginning of the year, the overall vacancy factor, including sublease space, was 25%. Sublease space accounted for over 400,000 square feet of available space. This sublease space has been either leased or returned to the landlord as direct space.
Another indication of a possible recovery in the office market is in vacancy for spaces under 5,000 square feet. To date, this rate is 6.5%. For properties under 3,000 square feet, the vacancy rate is 4.5%.
The overall downtown Class A office space vacancy rate now stands at 8.0%. Class B is holding at 9.5%. The office markets of South of Market and Potrero Hill continue to be depressed with vacancy rates in excess of 28% and 35%.
Rental rates have remained flat with an average rate of $22.00 per square foot, including all classifications.
The industrial market remains steady with a vacancy rate of 12%. The vacancy rate of industrial spaces under 10,000 square feet is less than 8%.
The market for retail space that is less than 3,000 square feet remains very strong, with the vacancy rate under 4%. Overall vacancy, due to blocks of larger spaces over 25,000 square feet being vacant, is at 15%.
|
Peter
Rosenthal and Steven Newhauser are agents 
