The COVID-19 pandemic dealt a body blow to the Bay Area’s office life over the past year, leading to work-from-home precautions and a corresponding increase of office vacancy rates across the region.
Of all the Bay Area’s commercial office rental markets, San Francisco endured the largest percentage of new vacancies as a result of the pandemic, according to data compiled by Colliers International, which surveyed six markets.
“Across the board, in all of our sub-markets in the past year vacancy rates have increased,” said Douglas Garcia, Colliers’ Northern California research director.
During the fourth quarter of 2019, the vacancy rate for the San Francisco office market stood at 4.5 percent and by the end of 2020, it had grown to 11.2 percent, marking a 149 percent jump in vacancy rates over the course of just one year.
The Silicon Valley market saw its office vacancy rate jump from 9.8 percent to 12.7 percent during the same period, while in the East Bay/Oakland market – which includes Berkeley, Emeryville, Richmond and Alameda – the rate rose from 7 percent to 10.9 percent.
While the numbers appear dramatic, many office rental markets in the Bay Area were extremely tight before the pandemic hit, Garcia said, noting that a 10 percent vacancy rate is generally considered to be “well balanced.”
“Now things are north of 10 percent, and there’s definitely room to improve, but in the general overall sense of the health of the market, it’s not as doom and gloom as you might think,” he said.
Garcia said after the pandemic, when people feel comfortable going back to offices, the rental market is expected to pick right back up again.
“The fundamentals are there. The markets are healthy. This is completely unlike the last recession,” he said.