T
he San Francisco office market, once the worst in the nation, may be showing signs of recovery. Last year's surge in sales and leasing has brought a glimmer of hope to the sector. Downtown office towers traded for an average $310 per square foot, up from $253 in 2023 and a low point of $1,106 in 2022.

    The market hit rock bottom when vacancy soared to over a third of offices during the shift to remote work, causing prices and rents to plummet. However, local buyers set a new floor for the market at prices 75% off their previous values. Last year's sales more than doubled compared to 2022 and 2023 combined, with 23 office buildings sold for $916 million.

    This growth in sales suggests a larger buyer pool and increased confidence in the market. Property values have stabilized for certain types of buildings in choice locations, with Downtown's newer Class A buildings selling for an average $329 per square foot last year. Existing tenants are also driving up values as more buildings hit the market with them on board.

    While prices are still far below their peak five years ago, some office buildings are trading at fire-sale prices. However, experts believe that the market has found its bottom and is already showing signs of appreciation. This year, CBRE predicts growing lease demand could lead to a significant rebound in pricing, drawing back institutional investors who pulled out of San Francisco years ago.