San Francisco office leasing hits record

San Francisco office is finally acting like a real market again. That’s the story here. After years of empty floors, sublease dumps, and “maybe nobody comes back” anxiety, demand has turned hard enough that brokers and landlords are talking about tightening supply, not just survival. The shift showed up through 2025, but early 2026 made it harder to dismiss as a one-off — leasing topped 3.4 million square feet in the first quarter, and tenant demand pushed above the city’s pre-pandemic baseline. (kidder.com) ### What actually changed? The simple version is that companies are shopping for space again — especially tech companies, and especially AI companies. VTS tracked more than 370 prospective tenants entering the San Francisco market from January through March, the highest count it has recorded there in more than a decade. Those tenants were looking for 6.3 million (kidder.com) (therealdeal.com) ### Why is AI such a big deal here? Because AI companies are not just taking a few startup suites. They’re signing large, confidence-heavy leases. Anthropic took 420,000 square feet at 300 Howard in January, then another 102,000 square feet at 400 Howard in March, after already taking 104,000 square feet at 505 Howard late in 2(therealdeal.com)et across multiple buildings. (kidder.com) ### Where do robotics firms fit in? They matter because they widen the recovery beyond pure software. JLL’s Bay Area robotics data shows the sector now holds more than 220 leases totaling 7.6 million square feet, up roughly 15-fold from under 500,000 square feet in 2020. Tesla alone recently signed 276,000 square feet of flex office space near Fremont for Optimus(kidder.com)package — not just desks and conference rooms. (therealdeal.com) ### So is this just a San Francisco story? Not entirely, but San Francisco is standing out. VTS says the city’s current office demand is 14% above its 2018-2019 average, making it the only major U.S. gateway market clearly above its pre-pandemic baseline. National office demand improved too in Q1 2026, but San Francisco’s rebound is unusually concentrated in AI and adjacent sectors. (therealdeal.com) ### If demand is back, why is vacancy still high? Because leasing and occupancy move on a lag. A company can sign a lease today and take months to build out the space before people actually move in. JLL notes that total availability in San Francisco has fallen by nearly 3 million square feet over four quarters, and says availab(therealdeal.com)the market in “improving fundamentals” territory rather than full recovery mode. (jll.com) ### Are rents recovering too? A little. Cushman & Wakefield says average asking rent in San Francisco ended Q1 2026 at $69.16 per square foot, up from $68.46 in Q4 2025. That’s not a moonshot. But it does tell you landlords are no longer cutting in only one direction. (cushmanwakefield.com)ration. A recovery powered by a narrow tenant base can move fast, but it can also wobble fast. If AI hiring slows, venture funding cools, or a few giant tenants pause expansion, the momentum can fade. The market is healthier than it was, but a lot of the energy is still coming from a small set of very aggressive occupiers. (kidder.com) ### Bottom line? San Francisco office is no longer just a distress story. It’s a selective rebound story — led by AI, widened by robotics, and strong enough that empty-space math is starting to improve. But the comeback is still uneven, and the next question is whether demand broadens beyond the current tech wave. (kidder.com)