\u201cThe momentum in 2025 just really started to show up in data versus vibe,\u201d Newmark<\/a> Vice Chairman Christina Clark<\/a> said. \u201cAnd I think that data is going to continue through the next few quarters and get very healthy, very happy. Statistically, we\u2019ll be able to tell the story that people were feeling at the end of 2024, then we started to see the numbers in 2025, and now it will prove itself in 2026.\u201d<\/p>\n Tenants took 1M SF of office space on a net basis in the third quarter, the fifth consecutive quarter of positive absorption for the city, according to CBRE<\/a>. The city\u2019s vacancy rate fell by 3.7% during 2025, the largest annual decrease since 2011.<\/p>\n AI is largely responsible for the leasing momentum. Sierra AI signed the largest lease of the fourth quarter, taking 258K SF at 185 Berry St., on the heels of major deals by OpenAI<\/a> and Nvidia<\/a>.<\/p>\n But other types of tenants are either leasing new space or renewing their commitments to existing offices. Kirkland & Ellis and DocuSign both renewed their downtown San Francisco<\/a> leases, while fintech company Carta and fitness-tracker maker Ouraring found new homes.<\/p>\n And the tenants that are looking want their spaces fast.<\/p>\n \u201cWhat we’re seeing with AI and frontier tech companies, and even some professional services firms, is that they want the space in 12 months or ready to be occupied in 24 months,\u201d Clark said. \u201cYou don\u2019t have time to wait.\u201d<\/p>\n Still, even with the urgency and the explosive market capitalizations of some of the companies looking for space in San Francisco, there is a clear difference between today and the city\u2019s last boom time.<\/p>\n \u201cThere are at least a dozen tenants in the market right now looking for 100K SF, not 500K SF, except for some of the very large companies, like an OpenAI or an Anthropic<\/a>,\u201d Clark said. \u201cThat\u2019s very different from what we saw in the 2010s.\u201d<\/p>\n During San Francisco\u2019s last office heyday, tech giants like Google, Meta and Salesforce took down office space in enormous swaths, in some cases building entire towers measuring 1M SF or more for their swelling ranks.<\/p>\n Today\u2019s tenants are looking for smaller spaces, but they\u00a0have also honed in on the highest quality the city has to offer, according to Colin Yasukochi<\/a>, executive director of CBRE<\/a>\u2019s San Francisco office.<\/p>\n Deals like OpenAI\u2019s move to former Uber space<\/a> in Mission Bay highlighted the appeal of turnkey, heavily improved offices, Yasukochi said.\u00a0<\/p>\n But space where a prior tenant has already invested in improvements is increasingly scarce. As a result, new construction is no longer competing with the city\u2019s entire inventory but instead with a shrinking slice of buildings capable of meeting tenant needs.<\/p>\n Clark said some tenants are already thinking beyond the next lease cycle, but as of Q4, no new office space was in the construction pipeline, according to CBRE.<\/p>\n \u201cWhat we\u2019re seeing now is companies like private equity firms starting to look that far out, companies that have a little bit more depth,\u201d she said. \u201cI think we\u2019ll start to see in the next few years some of the AI companies thinking bigger, thinking more long-term as they build depth to their portfolio and business.\u201d<\/p>\n That shift has developers ramping up early-stage planning.<\/p>\n Hines filed permits<\/a> for a tower at 77 Beale St. for what could become San Francisco\u2019s tallest, a roughly 1,225-foot-tall office building that would dramatically reshape the skyline if it moves forward.\u00a0<\/p>\n \n OpenAI subleased a portion of Uber’s headquarters space in San Francisco’s Mission Bay neighborhood.\n <\/p>\n Lincoln Property Co. and McCourt Partners are in talks for a potential redevelopment of the former Golden Gate University<\/a> campus at 536 Mission St., where plans outline either a 700-foot mixed-use tower or a 752-foot office tower.<\/p>\n Yasukochi said institutional investors are returning after sitting on the sidelines earlier in the downturn.<\/p>\n \u201cInstitutional investment financial partners are willing to put their money at risk because they do believe the market has a lot of upside potential,\u201d he said.<\/p>\n On the construction side, early-stage activity is picking up.<\/p>\n![\"Placeholder\"\/](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2025\/10\/placeholder.png\")
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