SF posts Q1 leasing surge

San Francisco opened 2026 with its busiest office-leasing quarter in years, as artificial intelligence companies signed some of the market’s biggest new deals. (savills.com.au) Savills put first-quarter leasing at 3.8 million square feet, the city’s strongest quarter since 2014, while Avison Young counted 3.82 million square feet, the highest since the second quarter of 2018. CBRE reported 2.27 million square feet of positive net absorption in the quarter, meaning more space was occupied than vacated. (savills.com.au) (avisonyoung.us) (cbre.com) The biggest named tenants were AI firms. Avison Young said Anthropic signed 532,933 square feet, OpenAI 282,124 square feet and Crusoe Energy 130,234 square feet in San Francisco during the quarter. (avisonyoung.us) Together AI added another 150,000 square feet at 2 Henry Adams Street for a new headquarters, with occupancy scheduled for summer 2026. Bisnow reported the company had grown from 3,000 square feet in 2023 to 30,000 square feet before this six-year lease. (bisnow.com) OpenAI also pushed beyond San Francisco. Bisnow reported that it signed a 10-year lease for about 202,000 square feet near the Richmond ferry terminal, in a building with more than 14,000 amps of power that could support robotics work. (bisnow.com) The rebound is uneven across the region. Colliers said the San Francisco Peninsula recorded 99,846 square feet of occupancy gains in the first quarter, its third straight quarter of positive net absorption, with 422,000 square feet of new preleasing in San Mateo and downtown Redwood City. (colliers.com) Inside San Francisco, vacancy is still high even after the leasing burst. CBRE put the citywide vacancy rate at 30.4% at the end of March, while Cushman & Wakefield put it at 31.6% and said sublease vacancy fell to 4 million square feet, down nearly 20% from the prior quarter. (cbre.com) (assets.cushmanwakefield.com) Landlords are not seeing demand spread evenly across all buildings. Cushman & Wakefield said Class A Tier 1 offices ended the quarter with 9.4% direct vacancy and average asking rents of $110.15 per square foot, far tighter and pricier than the broader market. (assets.cushmanwakefield.com) That helps explain where the new leases are landing. Bisnow said AI tenants are taking buildings with heavy power, existing build-outs, or large contiguous blocks, while Avison Young said AI companies now occupy 8.75 million square feet in San Francisco, up from just over 2 million square feet in 2020. (bisnow.com) (avisonyoung.us) For San Francisco’s office market, the first quarter did not erase a 30%-plus vacancy problem. It did show that AI tenants are large enough, and specific enough in their building needs, to move citywide numbers on their own. (cbre.com) (avisonyoung.us)