GOODER AND HARDER, SAN FRAN: Office Vacancy Rate in San Francisco Hits an Even Higher High.

Having hit a pandemic-era high of 23 percent in the third quarter of last year, the effective office vacancy rate in San Francisco has since ticked up another 110 basis points to just over 24 percent, representing nearly 21 million square feet of vacant office space in buildings spread across the city, with 5.6 million square feet of space which is technically leased but unused and being offered for sublet, which is up from 5.2 million square feet of sublettable space in the third quarter, and the amount of un-leased and non-revenue producing space having increased from 14.7 to 15.2 million square feet, according to data from Cushman & Wakefield.

And is this just the start? From the comments:  “One wonders what effect the expiring leases will have on office vacancy in 2023-24? I’m told there are ‘a lot’ of leases out there ready to expire in 2023. The ‘other shoe’ are CMBS loans that need to be recast in 2023 and 24. The appetite by the banks and lenders for refinancing vacant office buildings is to put it mildly, ‘lean’. Commercial loan rates have gone from 4.0 – 4.5 to 6.0 & 7.5 % and some watchers expect to see banks going double digits by the end of ‘23. I guess we watch as this slow motion train wreck begins to take shape in the coming months. By the way, office vacancy in the SoMa and Mission have also reached new highs of 45%. Well that was a month ago.”

(Classical insult in headline.)