Office supply constraints lead to rising rents and declining availability
Demand continues to outpace supply in San Francisco, resulting in a 30-basis-point decrease in overall availability, quarter-over-quarter, to 7.9%. This marks a 240-basis-point decline over the year. Declining availability is putting upward pressure on asking rents which ended Q1 at $74.67 per square foot (psf) for all classes. Class A rents climbed to an average of $77.41 psf, increasing by 2.1% from the end of last year alone. New supply is limited with only a handful of projects underway, and all new product completing this year has already been pre-leased to-date. The technology, advertising, media and information (TAMI) and coworking sectors continue to dominate the war for space.