Downtown Revival: San Francisco Roars Back As New York Joins The Office Comeback

San Francisco’s downtown, written off by some as a permanent ghost town, is starting to look busy again. More desks are getting leased, weekday foot traffic is picking up and lunch lines are stretching longer at downtown restaurants. Industry researchers now say San Francisco, alongside New York City, is helping lead a broader national office-market comeback.

According to a report by Transwestern, New York has logged five straight quarters of strong market fundamentals, enjoying robust absorption, lowered availability, and a sharp decrease in sublet space, a pattern that is helping fuel a rebound for downtown retailers and restaurants. The brief, titled The Giants Awaken and authored by Corrie Slewett and Tyler Hill, stacks up both cities’ gains in terms of absorption, availability and rent growth.

Why City Hall Matters

Transwestern credits new leadership at City Hall with helping breathe life into downtown, and Mayor Daniel Lurie has made revival of the city’s core a marquee priority since taking office in January 2025. The Office of the Mayor highlights efforts to speed up permitting, encourage office conversions and build public-private partnerships meant to pull new leasing and fresh investment into the central business district.

Numbers Behind The Bounce

In raw numbers, Transwestern reports that San Francisco logged roughly 6.5 million square feet of leasing activity in Q3 2025, with about 7.4 million square feet of prospective tenant activity and year-to-date absorption near 115,356 square feet. The same report points to a 100-basis-point drop in citywide vacancy in Q3, average asking rents of around $62 per square foot and Class A averages close to $74.50 per square foot, with top-tier trophy space sometimes commanding about $100 per square foot.

AI, Tenants And Foot Traffic

Industry trackers say a big driver behind the rebound is the tech sector, especially AI firms chasing talent and space near core engineering hubs. As early-market signals from VTS and others have noted, early-stage tenant searches and stronger badge-swipe attendance suggest the leasing pipeline is widening even before all of the deals formally hit the books.

Investors And Conversions

Investors and landlords are adjusting in real time. Higher-quality Class A buildings are trading and refinancing more frequently, while some owners explore conversion plans or heavier upgrades to keep older properties competitive with rising demand for amenities. Brokers point to increased leasing by well-funded AI companies and opportunistic capital circling conversion plays as cues that the recovery could pick up speed, according to Commercial Observer.

That picture of stronger leasing, shrinking sublet inventories and more weekday riders into downtown is laid out in market coverage by Connect CRE, drawing on Transwestern’s brief. For downtown workers, restaurateurs and landlords, the next plot twist is whether this streak can last through multiple quarters and turn today’s momentum into durable gains in occupancy.