San Francisco's office market is showing renewed strength, posting its highest leasing activity in ten years as tech companies lead the charge in securing space. According to a recent Savills report, the city saw 3.4 million square feet of office leases signed in Q1 2025 — a clear sign that momentum is building in the post-pandemic commercial real estate recovery.
Leasing Activity Rises as Big Tech Returns to the Office
Much of the leasing surge was driven by major tech tenants. Google played a prominent role, finalizing two substantial deals:
430,000-square-foot renewal and expansion at 345 Spear Street
274,000-square-foot renewal at 215 Fremont Street
Other key transactions in the quarter included:
JPMorgan Chase renewing and expanding into 280,000 square feet at 580 Mission Street
Lyft, which renewed 163,000 square feet at 185 Berry Street
Databricks, which signed a lease for 150,000 square feet at 1 Sansome Street
These five leases alone account for a significant portion of total activity, reflecting growing corporate confidence in a return to the office — particularly in high-quality buildings.
Availability Drops Amid Steady Demand
The increase in leasing has also impacted vacancy levels. The total availability rate dropped by 100 basis points, falling to 35.6% in the first quarter, as more tenants solidify long-term space commitments.
The Financial District remains San Francisco’s most expensive submarket, with average asking rents hovering at:
$70.17 per square foot in the north
$72.17 per square foot in the south
Tenants continue to favor Class A buildings in premium locations, with flight-to-quality trends shaping demand.
Office Market Still Faces Financial Pressures
Despite growing lease activity, the market isn't out of the woods. High interest rates continue to strain property owners, leading to distressed asset sales and lender involvement.
One example is the KPMG Building at 55 Second Street, a 25-story, 380,000-square-foot tower. Newmark has been enlisted to market a $187.5 million loan backed by the property. With an anticipated sale price in the $300–$400 per square foot range, the loan is estimated to be valued at approximately $140 million.
The loan, originated by Canada Life Assurance in 2019, matures in October 2026—shortly after anchor tenant KPMG plans to vacate its 140,000-square-foot lease and relocate to 505 Howard Street.
The building's owner, Paramount Group, has already written down its investment in the property to zero, having purchased a 44% stake for $402 million in 2019. Paramount has also written off two additional assets acquired that year:
Market Center, a 745,000-square-foot property bought for $722 million
111 Sutter, a 293,000-square-foot asset purchased for $227 million
Business Leaders Signal Optimism for Office Expansion
A recent KPMG survey of 100 San Francisco-based companies — each generating over $50 million in annual revenue — offers a promising outlook for office demand.
75% of executives said they plan to increase their office footprint within the next 12 to 18 months
Nearly 80% aim to have employees back in the office more regularly
66% anticipate headcount growth this year
The findings suggest that many businesses are doubling down on in-person collaboration, even as the commercial office sector continues to navigate structural shifts.
Source: https://www.globest.com/2025/04/09/tech-deals-lead-san-francisco-office-leasing-to-10-year-high/