S
an Francisco's commercial real estate market is showing signs of recovery, despite a record-high vacancy rate. Two major deals have been announced: UC San Francisco will lease 300,000 square feet in a new building at the Potrero Power Station redevelopment, and OpenAI has subleased a 315,000-square-foot building in Mission Bay. The combined 615,000 square feet of office space is the largest deal in one month since the pandemic began four years ago.

    The record vacancy rate of 37.3% in the third quarter is an increase from the previous period, but office availability has remained steady at 39.1%. CBRE reports that 8.7 million square feet of offices are available for sublease, a slight increase from the previous quarter. New York-based accounting firm KPMG has also leased a 96,300-square-foot office in the South Financial District, although it will be downsizing its overall footprint by 32.6% in 2026.

    Industry experts are cautiously optimistic about the market's prospects. Mark Geisreiter, a veteran broker with Newmark, notes that this has been one of the strongest months of leasing since 2019. Derek Daniels, regional director of research for Colliers, believes that San Francisco's commercial real estate market may have reached its bottom and is now poised for recovery.