Options continue to shrink, particularly in Class A space
Quarterly leasing activity in San Francisco totaled 2.6 million square feet (msf), still trending above the five-year average but down a bit from stronger quarters seen in the past two years. The lack of supply for large, contiguous blocks of space has been an ongoing constraint on options in the market and availability continues to decline. Overall availability dropped 150 basis points over the year to 7.3%. Class A availability is declining at an even faster rate, down 210 basis points over the same period (now at 6.2%). Correspondingly, asking rents continued an upward trajectory as well, with overall rents averaging $81.04 per square foot (psf) — an increase of 1.6% over the previous quarter. Class A rents averaged $89.23 psf, up 4.4% from Q2.