July 25, 2017
The second quarter San Francisco office market reports from NKF and JLL reveal an uptick in demand is driving the market forward, despite a supply increase and muted absorption. NKF reports that tenant demand rebounded to 6.5 million square feet in Q2 2017, after dipping below 5 million square feet in 2016.
Meanwhile JLL notes, leasing activity is strong, with more than 1.3 million square feet in transactions greater than 20,000 square feet consummated in the second quarter. NKF says the less than “brisk” Q2 leasing was largely attributed to suppressed supply, which constricted even further.
Increased demand combined with a drop in availability continued to apply upward pressure on asking rents, reports NKF, which noted annual direct asking rates rose slightly to $71.95-per-square-foot from $70.66. Tenants are becoming more efficient, often densifying occupancy and are more likely to renew than relocate.
More than 3.5 million square feet of space is expected to deliver in 2017 and 61.5% of that is pre-leased, reports NKF.
For comments, questions or concerns, please contact Dennis Kaiser