New office buildings in San Francisco are filling up years before they’re ready for occupancy. Salesforce’s 714,000-square-foot lease in the 61-story tower due for completion in 2017 is the lastest indication that big tenants are eager to make big deals. That means much of the new office space being built is already off the market.
Much of the 5.5 million square feet of new Class A office that will be added in the next four years is pre-leased, meaning rental prices could continue increasing significantly, according to a CBRE report.
“If you’re a tenant looking for a large block of space, or looking to move to a new building, the space in those buildings is getting depleted,” said Colin Yasukochi, research director for CBRE.
In the next two years the new supply of space, about 3.7 million square feet, will do little to pacify demand, Yasukochi said. Class A rents in San Francisco are close to $60 per square foot and will likely continue to see double-digit growth. JLL is tracking 14 tenants looking for spaces of 100,000 square feet or more whereas there are only six blocks of space available that size.