Strongest Net Absorption Since the Dot Com Boom
The overall vacancy rate in San Francisco shrunk 70 basis points to 5.1 percent during the last quarter of the year continuing to inch towards a historic low. This is the lowerst the vacancy rate has been in the City in three years.
> LEASING VOLUME
San Francisco closed the year with solid leasing activity, which equated into nearly 2.4 million square feet of transactions closing. Leasing activity ended the year nearly 32 percent above the quarterly 18-year average of 1.8 million square feet. Tenant requirements continued to swell during the last quarter of 2018 to 6.9 million square feet. As tenant demand for space in San Francisco continued to rise during the last quarter of the year, the technology sector was once again the leading requirement in the market accounting for nearly 44 percent of the demand.
The City experienced another strong quarter of positive net absorption posting nearly 578,000 square feet and overall net absorption closed the year at over 4.2 million square feet. No surprise that Class A properties accounted for 89 percent of the positive net absorption for the year and specifically new Class A product made up 2.3 million square feet of absorption.
Overall weighted rents rose 3.9 percent to $85.36 and non-weighted rents grew slightly by 1.3 percent to $75.70 per square foot. The Financial District Class A weighted rent increased the most during the last quarter of the year from $81.84 to $92.54 per square foot.