- By Patrick Hoge | Examiner staff writer |
- Jan 17, 2025 Updated 20 hrs ago (SFExaminer.com)

Signaling a nascent commercial real estate recovery, San Francisco office sales are trending up, prices appear to have bottomed out and increased leasing demand might be leading to a price rebound for properties, according to the real-estate company CBRE.
The indicators aligned with CBRE’s December pronouncement that the U.S. office market was finally stabilizing after a COVID-19 pandemic-induced downturn.
Sales of office buildings in San Francisco, where office vacancy rates were at or near record highs last year, could top $1 billion in 2025, CBRE said.
There are about 30 buildings currently under contract or being marketed for sale, and if those sell, about 9% of The City’s 100 million square feet of office inventory would have been sold at a substantial discount from previous acquisition prices since 2023, according to data provided by Colin Yasukochi, executive director of CBRE’s Tech Insights Center.
The reset in prices could allow new landlords the opportunity to lower rents — which could spur leasing activity — and invest capital into improvements to create vibrant environments that are attractive to companies and employees, CBRE said.
If leasing trends further improve, interest rates decline and the economy accelerates, recent investors could be rewarded with much higher building values in the years ahead, the company said.
Among CBRE’s other findings:
• The majority of office-building sales since 2023 were distressed, reflecting factors such as reduced income, inability to make debt payments or the need to refinance maturing loans.
• During the second half of 2024, prices started to stabilize and increase in some cases, with Class A buildings sold for an average of $329 per square foot, up from $250 per square foot in 2023.
• The average price per square foot for office buildings increased to $310 in 2024 from $253 per square foot in 2023 and a peak of $1,106 per square foot in 2022, when only three buildings were sold.
• The number and dollar volume of office properties sold in 2024 — 23 buildings for $916 million (including partial-interest sales and loan-note sales) — more than doubled compared with the prior year, surpassing 2022 and 2023 combined. In those two years, 12 buildings were sold for a combined $863 million.
San Francisco’s office market has been weighed down by the rise of remote work following the COVID-19 pandemic and layoffs in the tech industry.
Bolstered by the disproportionate amount of venture investment in local companies, The City’s burgeoning artificial-intelligence sector has been a bright spot, producing some large leases — such as the 306,000-square-foot lease signed by OpenAI at 550 Terry Francois Blvd. in the third quarter of 2024 — and smaller deals for companies that many hope will grow in size and number in the future.
About 30% of the roughly 7.2 million square feet in leasing activity in San Francisco in 2024 came from startups, said Chris Pham, a senior analyst with the real estate company JLL.
“We’re really fortunate to be in San Francisco for the AI boom,” Pham said.
The San Francisco office market in the fourth quarter of 2024 had an overall vacancy rate of 36.5%, down from a record high 36.9% for the third quarter.
What was particularly heartening to many was the fact that for the first time in nearly five years, net absorption was positive — meaning more space was leased than vacated — to the tune of 211,362 square feet, CBRE said.
One significant development was the reemergence of large pool buyers — including institutional investors — which reentered the market after being absent in 2023, “when only all cash and high net worth buyers were in the market,” CBRE said.
The main reason, the company said, was “upside market potential in the leasing market that is being driven by increased demand from the AI industry.”