2025 Mid-Year Office Market Report: Part Five

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• TAMI Remains Top Sector for Near-Term Lease Expirations in San Francisco and the Bay Area
• San Francisco Lease Term Length Average Surpasses Pre-COVID Levels in 2025, Led by Class A
• Free Rent Ratio of Term Continued to Climb in 2025 for San Francisco, but Shows Signs of Plateauing in the Bay Area
• San Francisco Work Value Ratios Surge to Record Levels While Gateway Market Trends Ease
• Bay Area and San Francisco Trail Gateway Rent Growth but Show Class B/C Momentum
• TAMI’s Share of Leasing Activity Declines in the San Francisco Bay Area as Market Diversifies

The office sector is showing signs of stabilization, but the recovery looks very different depending on market, asset class, and tenant type.

Check out our new Mid-Year Office Market Report, powered by CompStak data through Q2 2025. We’re highlighting critical shifts across 11 gateway markets including Boston, New York, San Francisco, Dallas–Fort Worth, and Washington, D.C.

Click here to download the full report here.

TAMI Remains Top Sector for Near-Term Lease Expirations in San Francisco and the Bay Area

In San Francisco, more than 14% of expirations are scheduled for 2026, while nearly 16% will occur in 2027 in the Bay Area. TAMI remains a concern, as its share of leasing declined year over year in 2025, suggesting demand has not fully returned despite new activity from AI firms. TAMI accounts for 42.3% of expirations in San Francisco and 50.6% in the Bay Area through 2027. On a more positive note, although legal services represent 11.3% of San Francisco expirations through 2027, recent leasing activity in this sector has strengthened, indicating many of these leases may be renewed or lead to expansion-driven demand.

San Francisco Lease Term Length Average Surpasses Pre-COVID Levels in 2025, Led by Class A

In 2025, San Francisco’s average lease term length rose above 4Q 2019 levels for the first time, contrasting with the Bay Area, where terms have trended downward since late 2023. Prime Class A drove the gains—up in San Francisco but still 12% below pre-COVID in the Bay Area—while Class B/C lease terms remain weak in both markets.

Free Rent Ratio of Term Continued to Climb in 2025 for San Francisco, but Shows Signs of Plateauing in the Bay Area

San Francisco’s average free rent ratio continued to climb in 2025, surpassing Bay Area levels across all building classes. The widest gap was in non-Prime Class A space, where free rent accounted for 8.5% of the lease term—about 240 basis points above the Bay Area average for that segment. Gateway markets overall also saw free rent ratios rise in 2025, though the pace of growth has slowed, suggesting that concessions may be nearing equilibrium.

San Francisco Work Value Ratios Surge to Record Levels While Gateway Market Trends Ease

Work value remains a major component of concessions, rising steadily in most markets since 2019 amid a softer office environment, higher construction costs, and growing tenant demand for quality buildouts. By 2025, the average ratio of total work value to total rent reached a record 18.5%, climbing year over year for five consecutive years in San Francisco, The gateway market average, while still above 2019 levels, has eased over the past two years, and the Bay Area’s 2025 ratio dipped below its 2019 benchmark for the first time. In contrast, San Francisco stands out: both its work value ratio and free rent share of term have posted the strongest gains since 2019, far outpacing the broader gateway market.

Bay Area and San Francisco Trail Gateway Rent Growth but Show Class B/C Momentum

The Bay Area stood out for its relative resilience, with both Prime Class A and Class B/C space showing positive historical and recent effective rent growth. While performance trailed the gateway market average—where every building class posted gains—the Bay Area still outperformed San Francisco. Across both markets, Prime Class A effective rents were above 2019 levels by 2025. Class B/C space also showed positive growth in San Francisco and the Bay Area, with the Bay Area recording the stronger gains.

TAMI’s Share of Leasing Activity Declines in the San Francisco Bay Area as Market Diversifies

From 2016 to 2025, TAMI tenants consistently led office leasing in the San Francisco Bay Area, but its dominance declined from a peak of 58.1% in 2018 to 31.9% in 2025. Other sectors gained ground: government and nonprofit tenants rose to 13.6% in 2024 and 11.8% in 2025, life sciences maintained a steady presence above 6% after peaking at 9.4% in 2020, and legal services surged to a decade-high of 12.6% in 2025. Meanwhile, coworking demand has virtually disappeared since 2023. Overall, the Bay Area market is shifting away from tech-heavy demand toward a more balanced mix of public sector, legal, and life sciences tenants.