The San Francisco Commercial Real Estate Market

Jun 4, 2024

San Francisco has attracted commercial real estate investors and tenants nationwide as a vibrant, high-demand market to seek out opportunities. A buzzing tech and finance hub, San Francisco represents a land of potential for those seeking to trade in one of the highest-value markets in the US.

Crexi equips these commercial real estate players with the data, tools, and broker connections they need to discover and transact commercial real estate in San Francisco. Brokers use Crexi's robust listing and marketing suite to represent San Francisco properties to a national audience and capture the highest return on investment for their clients.

With over $7 trillion represented and $615 billion in facilitated transactions since its launch nationwide, Crexi proudly serves San Francisco and the larger Bay Area economy as the nation's fastest-growing online commercial real estate platform.

The State of San Francisco Commercial Real Estate

As one of the largest cities in California, San Francisco is a major cultural, commercial, and financial center. The city's diverse neighborhoods, ranging from the bustling Financial District to the eclectic Mission District, offer a vibrant mix of architectural styles, culinary experiences, and cultural activities, making it a unique and desirable place to live and work.

Economic growth has been robust, driven by a strong presence of key technology, finance, and tourism businesses. Companies like X and Uber have headquarters here, contributing to the city's reputation as a global innovation hub.

The commercial real estate market in San Francisco is dynamic, with ongoing development projects reshaping the skyline and providing new investment opportunities. Despite the high cost of living, the city's thriving job market and quality of life continue to attract professionals worldwide.

San Francisco Regional Breakdown

San Francisco's population growth has experienced fluctuations in recent years, influenced by housing affordability and urban density. While some residents have relocated to more affordable areas, the city's continued appeal as a tech hub and cultural epicenter ensures a steady influx of new talent and businesses.

Nearly 809,000 reside in the city, while more than 4.5 million are in the metropolitan area.
Population growth has been slow but steady, increasing by about 1% since 2010.
The fastest-growing neighborhoods in San Francisco include the Financial District, South of Market, Mission Bay, and Dogpatch, which experienced growth of 71% from 2010 to 2020.
The median age is 40.6, a little higher than the figure in the US.
About 30% of the population is between the ages of 30-49.
Per capita income in the metro area is $71,052 and median household income is $128,151, both figures about 50% more than the amounts in the US, according to data on CensusReporter.org.

The San Francisco Job Market

San Francisco's economy thrives on its rich tapestry of industries, with technology being the cornerstone. Major companies like Google and Facebook anchor the city’s economic landscape, while a robust venture capital ecosystem fuels continuous innovation and startup growth.

The financial sector remains strong due to firms such as Wells Fargo and Charles Schwab. Additionally, government initiatives to foster economic resilience and sustainability have bolstered sectors like clean energy and biotechnology.This multifaceted economic environment supports steady job growth, offering diverse opportunities across various fields and attracting top talent globally.

The San Francisco metropolitan area is one of the largest economies in the US, according to JPMorgan Chase & Co., boasting a GDP of more than $729 billion.
Job growth in San Francisco County is projected to average 1.4% per year between 2024 and 2028, based on research by the California Department of Transportation.
The unemployment rate is 4.2% compared to 5.3% in California (as of March 2024).
Major employers include the Federal Reserve Bank of San Francisco, Github, Kaiser Permanente San Francisco, Levis Strauss & Co, Oracle Park, University of California San Francisco, and Williams-Sonoma Inc.
Key industry sectors are IT and software, social and digital media, life sciences and biotech, environmental and clean tech, and international business.
San Francisco is ranked among the best cities for jobs by WalletHub, based on criteria such as job opportunities, employment growth, and monthly average starting salary.
Investment and employment are booming for the San Francisco Bay area life science sector, with over 46 million SF of lab inventory in the Bay Area, according to research from Cushman & Wakefield.
A new 7-story life science building is moving forward in South San Francisco, near firms such as Amgen, Genentech, and Verily Life Sciences.
The city is witnessing a trend of converting office buildings into housing to address the housing shortage, while a surge in generative AI startups is helping to revive the office market.
Nearly 54% of residents hold a bachelor’s degree or higher, about 1.5 times the rate in the US.
The region is home to prestigious institutions like Stanford, the University of California, San Francisco (UCSF), San Francisco State University (SFSU), and the University of San Francisco (USF).
San Francisco boasts a well-connected transportation infrastructure, including major highways such as Interstates 80 and 280, the Port of San Francisco, and San Francisco International Airport (SFO).

San Francisco Industrial Market

The industrial market in San Francisco exhibited mixed performance in the first quarter of 2024, with varying vacancy rates and leasing activity across submarkets. While some areas like Mission Bay/China Basin experienced higher vacancies, others, including South of Market, showed healthier occupancy levels.

Despite these fluctuations, demand for industrial space remains robust, with notable lease and sale transactions. Rental rates have generally remained consistent, reflecting stable market conditions amidst ongoing economic challenges.

Market overview (CBRE San Francisco Industrial Figures Q1 2024)

Inventory: 21,677,040 SF
Vacancy rate: 26.6%
Absorption: -236,156 SF (Q1 2024)
Completions: 0 SF
Under construction: 0 SF
Key leases by tenant: SF Supply Master, City & County of San Francisco, East Star
Largest submarkets: Mission/Portero, Bayview/Hunters Point, Mission Bay/China Basin

Crexi Insights

These are the most recent San Francisco industrial lease and sales trends from Crexi Insights (as of May 2024):

For Lease (active)

Asking rate/SqFt (median): $27 per year
Median SqFt/listing: 5,062
Days on market: 103
Total listings on Crexi: 172 spaces

For Sale (active)

Median asking price: $3.21 million
Price/SqFt: $429
Asking cap rate: 4.8%
Days on market: 238
Total listings on Crexi: 35

Sales Comps (past 12 months)

Median sold price: $1.47 million
Sold price/SqFt: $498
Total sales volume: $105 million
Sold cap rate: 4.3%
Median SqFt sold/transaction: 4,975
Total SqFt sold: 306,000
Days on market (median): 87

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San Francisco Office Market

San Francisco's office market has shown signs of stabilization as major tenants have slowed the pace of shedding space, suggesting that right-sizing efforts may be reaching equilibrium.

Despite the challenges posed by high interest rates and the ongoing shift to hybrid work models, leasing activity exceeded 1 million square feet in the first quarter, driven by demand for smaller, cost-effective spaces and highly amenitized buildings.

Market overview (Colliers Office Market Research Report Q1 2024)

Inventory: 98,748,973 SF
Vacancy rate: 29.3%
Net absorption: -122,736 SF (Q1 2024) vs. -6,324,686 SF in Q4 2023
Net new deliveries: 0 SF
Under construction: 263,000 SF
Leasing activity: 1.1 million SF (Q1 2024)
Key leases by tenant: City of San Francisco, KPMG, Adyen, Bank of America, Winston & Strawn LLP, Regus
Largest submarkets: South Financial, North Financial, Civic Center/Mid-Market, SOMA East

Crexi Insights

If you're in search of the freshest data on San Francisco's office market, turn to Crexi Insights as your first choice. The platform provides up-to-date data on the city's commercial real estate market, including lease trends, sale listings, comparables.

Here are the latest stats and trends as of May 2024:

For Lease (active)

Asking rate/SqFt (median): $36 per year
Median SqFt/listing: 2,129 SF
Days on market: 301
Total listings on Crexi: 687 spaces

For Sale (active)

Median asking price: $2.72 million
Price/SqFt: $599
Asking cap rate: 5.9%
Days on market: 347
Total listings on Crexi: 52

Sales Comps (past 12 months)

Median sold price: $4.15 million
Sold price/SqFt: $643
Total sales volume: $284 million
Sold cap rate: 4.3%
Median SqFt sold/transaction: 4,918 SF
Days on market (median): 240

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San Francisco Retail Market

The retail market in San Francisco has faced increasing vacancy rates, driven by declining performance in Union Square and surrounding downtown areas. Limited new construction has kept the overall inventory steady, while store closures have compounded the vacancy issue.

However, there have been some positive developments with new openings such as Hej!Workshop by Ingka Centres and various coffee and Boba shops in East Cut and SoMa, where pockets of revitalization persist amidst broader market challenges.

Market overview (Cushman & Wakefield Retail Report Q1 2024 and US Shopping Center Report)

Inventory: 11,894,928 SF
Vacancy rate: 7.5%
Net absorption: -130,878 SF (Q1 2024)
Deliveries: 0 SF (Q1 2024)
Under construction: 0 SF
Key leases by tenant: 25th Irving Market, Casa Guadalupe Supermarket, ABA Protection, Bulgari

Crexi Insights

San Francisco retail lease and sales trends from Crexi Insights (as of May 2024):

For Lease (active)

Asking rate/SqFt (median): $35 per year
Median SqFt/listing: 1,969 SF
Days on market: 322
Total listings on Crexi: 582 spaces

For Sale (active)

Median asking price: $2.42 million
Price/SqFt: $499
Asking cap rate: 5.7%
Days on market: 199
Total listings on Crexi: 94

Sales Comps (past 12 months)

Median sold price: $1.5 million
Sold price/SqFt: $499
Total sales volume: $657 million
Sold cap rate: 7.0%
Median SqFt sold/transaction: 3,318 SF
Days on market (median): 122

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San Francisco Multifamily Market

The San Francisco multifamily market is showing signs of recovery, with vacancy rates stabilizing compared to the peaks seen over the last few years. While urban areas like San Francisco saw reductions in vacancies, some suburban regions experienced significant increases. Effective rents have increased across most of the Bay Area, although a few regions, including San Francisco, reported marginal declines year-over-year.

Market overview (Cushman & Wakefield Q4 2023 Bay Area Multifamily Report)

Total housing units: 1,877,839
Multi-unit inventory: 790,464 units
Vacancy rate: 5.7%
Average effective rent per unit: $2,468
Rent change: 0.3% (YoY)
Absorption: 9,464 (2023)
Under construction: 27,177 units
Largest submarkets: Santa Clara, Alameda, San Francisco, San Mateo, Contra Costa

Crexi Insights

Here are the most recent San Francisco multifamily Insights from Crexi (as of May 2024):

For Sale (active)

Median asking price: $2.68 million
Price/SqFt: $479
Asking cap rate: 5.4%
Days on market: 216
Total listings on Crexi: 107

Sales Comps (past 12 months)

Median sold price: $1.55 million
Sold price/SqFt: $792
Total sales volume: $1.87 billion
Sold cap rate: 5.4%
Total SqFt sold: 2.91 million
Days on market (median): 113

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Get more in-depth San Francisco market data with Crexi Intelligence.