Despite a burst of recent high-profile tech leases in Silicon Valley, downtowns in the Bay Area\u2019s three largest cities continue to be plagued by high vacancy rates, a new report shows.<\/p>\n
More than 30% of commercial space<\/a> in the central business districts of San Jose, Oakland and San Francisco is still sitting empty, according to the report by commercial real estate firm Cushman & Wakefield.<\/p>\n It\u2019s the latest sign that the post-pandemic recovery of the Bay Area\u2019s urban centers has not materialized in the way that many experts anticipated.<\/p>\n \u201cThe return to office seems to be stalled,\u201d said Mark Ritchie, president of San Jose-based real estate firm Ritchie Commercial. \u201cCompanies are not rushing to get everybody back into the office.\u201d<\/p>\n At the end of the January-through-March first quarter of 2026, the office vacancy rate was 30.8% in downtown San Jose, 31.1% in San Francisco, and 37.8% in downtown Oakland, Cushman & Wakefield reported. A year ago in the same quarter, the office vacancy rate was 31% in downtown San Jose, 32.8% in San Francisco, and 34.2% in downtown Oakland, statistics that Cushman & Wakefield provided to this news organization show.<\/p>\n \u201cWe have to come to terms with the reality that we have an endemic office vacancy in these three downtowns,\u201d said Ritchie. \u201cThe only good news is no one is constructing new office buildings.\u201d<\/p>\n Prior to the COVID-19 pandemic, in the October-through-December fourth quarter of 2019, San Francisco had a 5.4% vacancy rate, downtown Oakland was at 10.8%, and downtown San Jose at 12.8%.<\/p>\n For downtown San Jose, the major challenge for commercial landlords has been to find a way to compete with mixed-use neighborhoods such as Santana Row in West San Jose and Cityline in downtown Sunnyvale, both which offer significant amenities in the form of restaurants and retail stores.<\/p>\n Downtown San Jose offers top-notch restaurants, nightlife, unique entertainment hubs and live-performance venues, but not nearly as much destination retail as its nearby rivals.<\/p>\n \u201cDowntown San Jose definitely has more competition from other submarkets than is the case with the San Francisco central business district,\u201d Robert Sammons, a senior research director with Cushman & Wakefield, said. \u201cSan Jose is not really a 24\/7 downtown. It is more of an 18\/7 downtown.\u201d<\/p>\n However, the city\u2019s fortunes could be buoyed by a recent decision to market the office tower at 200 Park Ave.<\/a> to tenants willing to take as few as one or two floors in the 19-story building.<\/p>\n Previously, building owner Jay Paul Co. and its marketing team from commercial real estate firm Newmark had focused on convincing one tenant to lease the entire building, which totals 971,000 square feet of office space.<\/p>\n \u201cThis move might cast the net wider,\u201d Sammons said. \u201cThere are usually more small tenants in the market than large tenants. This could spur more activity in downtown San Jose.\u201d<\/p>\n In a conference call with Wall Street analysts in February, executives with the principal developer of Santana Row said the new One Santana office building<\/a> was fully leased.<\/p>\n \u201cOne Santana is 100% committed,\u201d Daniel Guglielmone, Federal Realty\u2019s chief financial officer, said during the conference call.<\/p>\n Artificial intelligence tech firms Etched, Securiti.ai, and Couchbase, along with professional services firm PwC U.S. Group, have leased space in the modern office building.<\/p>\n