The commercial heartbeat of San Francisco is showing faint signs of recovery, with recent reports indicating a drop in office space vacancy. According to data from CBRE, the city's office vacancy slid to 35.1% in the second quarter of 2025, the biggest decline since 2015. This marks the third consecutive quarter of decreasing vacancy rates. However, it's worth noting that San Francisco held the dubious honor of the nation's highest office vacancy rate in April, as per a SF Examiner report.
Despite the optimistic twist in the vacancy narrative, many experts acknowledge that the city has a historically high amount of empty office space. In times when remote work has cemented itself into corporate policies, a return to pre-pandemic low vacancy levels seems unlikely. Nonetheless, according to the SF Chronicle, the city is on track to experience its best leasing year since 2019, largely stimulated by artificial intelligence firms.
These AI companies, credited by Colin Yasukochi, executive director of CBRE's Tech Insights Center, have generated significant traction and account for a notable share of leased space. Yasukochi told the SF Chronicle, "It’s a turnaround, for sure. Things are moving in the right direction, and AI is really leading the charge — we don’t expect that to diminish too much." Indeed, AI-related leases peaked at more than 800,000 square feet in the first half of the year.
Adding to the rise in leasing activity, multiple large deals have been inked within the sector. Noteworthy companies like Notion and Databricks have expanded their San Francisco footprints. Moreover, in a departure from its remote work model, crypto outfit Coinbase has claimed a new, 150,000 square-foot office space at Mission Rock, a point of interest due to the sharp pivot from its erstwhile fully remote working model established in 2021. This move was highlighted in the SF Chronicle as a signal of change in the market's dynamics.
