2025 Mid-Year Office Market Report: Part Four

SKIP AHEAD TO

• Market of Focus: San Francisco Bay Area
• San Francisco’s Office Starting Rent Index Lags in Post-Pandemic Era, While Bay Area and National Markets Prove More Resilient
• TAMI Employment Drops More Sharply Than Other Office Employment in San Francisco Bay Area
• San Francisco’s Office Vacancy Rate Climbs Sharply to a New High in First Half of 2025, Widening Spread Over National Average

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.

Market of Focus: San Francisco Bay Area

KEY FINDINGS

• San Francisco’s Rent Index Still Lags behind 2020 levels
  The index fell 33% since 2020, compared with -6% in the Bay Area and +4.7% nationally.
• TAMI Employment fell 3x more than national decline from peak
  San Francisco Bay Area TAMI employment fell 13.1% since 2022 peak.
• Upcoming Lease Expirations Heavily Weighted to TAMI
  14% of San Francisco expirations hit in 2026, with TAMI industry tenants accounting for a healthy share.
• Lease Term Lengths Surpass Pre-COVID Levels, Led by Class A
  San Francisco term length rose above 2019 for the first time, driven by Prime Class A.
• Free Rent Ratios Climb Further in San Francisco
  Non-Prime Class A free rent averaged 8.5%, 240 bps above the Bay Area.
• Work Value Ratios Hit Record Highs in San Francisco
  The ratio to total deal value reached 18.5% in 2025, the highest on record.
• Bay Area Outperforms San Francisco in 
Rent Growth
  Both Prime Class A and B/C rents rose, with stronger gains in the Bay Area.
• Tenant Mix Shifts Away from TAMI
  TAMI’s share of leasing fell year over year to 31.9% in 2025, while legal and life sciences expanded.

San Francisco’s Office Starting Rent Index Lags in Post-Pandemic Era, While Bay Area and National Markets Prove More Resilient

From 2008 to early 2020, San Francisco’s starting rent index surged 102%, far outpacing the Bay Area (51%) and national (22%) gains. Since the pandemic, however, the San Francisco index has dropped 33%, compared with a modest 6% decline in the Bay Area and a 4.7% increase nationally. The city’s volatility reflects its heavy exposure to tech and remote work trends, leaving rents well below 2020 peaks despite recent signs of stabilization.

TAMI Employment Drops More Sharply Than Other Office Employment in San Francisco Bay Area

From 2007 to mid-2022, office-using employment in the San Francisco Bay Area grew 45% before contracting 10% through mid-2025. National office-using employment rose 21% over the same 15-year period before slipping 4% from mid-2022 to mid-2025.
Within this broader trend, TAMI employment in the San Jose–San Francisco–Oakland CSA increased by more than 85% from its post-recession low in 2010 to a peak in mid-2022. This period of expansion aligned with the tech sector’s dominance in the regional economy. However, since that peak, TAMI employment has declined by approximately 13% through August 2025, signaling a meaningful contraction. Despite the recent downturn, employment remains significantly above pre-2010 levels, suggesting the sector is undergoing normalization.

San Francisco’s Office Vacancy Rate Climbs Sharply to a New High in First Half of 2025, Widening Spread Over National Average

From 2007 through much of 2019, San Francisco’s office vacancy rates were consistently lower than the national average, often by several percentage points. The market reached a notable low of 6% in mid-2012, while U.S. vacancy remained above 10%. Both markets yielded higher vacancy rates during the 2008 recession and again during the COVID-19 pandemic, though San Francisco’s rate generally stayed below the national level through most of that period.
Beginning in early 2023, however, San Francisco’s vacancy rate rose sharply, surpassing the U.S. average and peaking at 22.5% in Q1 2025. By comparison, the national rate peaked lower at 19.7% in Q2 2025. This marks a reversal of the long-standing trend, with San Francisco shifting from historically below-average vacancy to one of the highest among major U.S. markets.