Regional Summaries

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San Francisco, CA

The 148,000-unit San Francisco/West Bay market-rate, investment grade apartment market loosened up slightly in the third quarter of 2017, thanks to a stall in net absorption during that quarter. The third quarter 2017 vacancy rate is 4.5% for market-rate apartments, according to Reis, up 10 basis points from the prior quarter but down 60 from a year earlier. Despite a gain of just 0.1% by both measures in the third quarter, the average asking rent was up 1.9% year-over-year to $2,997 per month at the time, with the average effective rent up 1.3% to $2,880. VIEW APARTMENT LISTINGS >
The U.S. is in the middle of a warehouse/distribution boom, but the West Bay’s (San Francisco Metropolitan Division) 31.8-million-square-foot warehouse/distribution market doesn’t have any space to boom into. Information technology and logistics are two of the few sectors to experience significant investment and innovation in the past two decades, and the latest trend involves them both. A third dynamic sector is biotechnology, and here as well, San Francisco’s 9.9-million-square-foot Flex/R&D market is struggling to accommodate them all. The vacancy rate for West Bay warehouse/distribution space was just 5.2% in the third quarter of 2017, down 10 basis points over the quarter and down 120 from a year earlier. Industrial rents are high and rising in the San Francisco/West Bay market, due to competition for the limited amount of available land. For warehouse/distribution space, Reis reports average rents at $9.64 psf asking and $9.06 psf effective, each up 0.9% over the quarter and up 4.1% and 4.3% year-over-year. The Flex/R&D vacancy rate is just 4.0%, down 30 basis points for the quarter and down 50 year-over-year. The average asking rent for San Francisco’s Flex/R&D space ended the third quarter at $15.93 psf, up 0.8% for the quarter and 4.0% year-over-year, while the average effective rent is $14.86 psf, up 1.0% over three months and 4.4% over twelve months. VIEW INDUSTRIAL LISTINGS >
Tenants seem attracted to new buildings in the 95.5-million-square-foot San Francisco/West Bay general purpose, multi-tenant office market, as an increase in new space added in the third quarter was accompanied by a surge of net absorption. Reis reports a 9.8% vacancy rate in the third quarter of 2017, down 40 basis points for the quarter but still up 30 year-to-date. After barely edging up in the first two quarters of 2017, average rents, like net absorption, had a strong third quarter. The average asking rent increased 0.6% to $58.89 psf, and the average effective rent rose 0.7% to $49.49 psf. The year-over-year gains, however, are still just 1.6% and 1.7%, respectively. VIEW OFFICE LISTINGS >
The vacancy rate in the 9.8-million-square-foot San Francisco/West Bay community-neighborhood shopping center market was 3.0% in the third quarter of 2017, unchanged from the prior quarter and down 30 basis points from a year earlier. Following two quarters of small rent decreases, in the third quarter of 2017, the average asking rent rose 0.4% to $36.44 psf, with the average effective rent up 0.5% to $33.13 psf. The quarter accounted for most of the year-over-year gains of 0.5% and 0.7%, respectively. VIEW RETAIL LISTINGS >

Source: Data provided by Reis, inc.

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