Scoring the San Francisco Bay Area Office Market

Just over two weeks ago, the San Francisco Bay Area hosted Super Bowl LX (60) on February 8, 2026, at Levi’s Stadium in Santa Clara, home of the 49ers. It marked the third time the region has hosted the Super Bowl and the second time at this venue, once again putting the San Francisco Bay Area in the national spotlight.

With the spotlight back on San Francisco, CompStak decided to check in on one of the nation’s most closely watched office markets at the outset of 2026. While we know who won the Super Bowl, the San Francisco Bay Area office market tells a more nuanced story. Below, we break down three areas where the market is winning and three where it’s still facing headwinds.

WIN: Trophy and Class A Effective Rents Are Stabilizing

In a meaningful positive signal, average office effective rents moved closer to 2019 levels in 2025 for both prime office buildings (trophy assets, new construction, and recently renovated buildings) and the broader Class A inventory for leases signed during 2025. Both categories have now grown year over year for two consecutive years after reaching post-pandemic lows in 2023. This is particularly notable given that San Francisco fell further from pre-COVID levels — and endured a longer recovery period than most other major office markets. In 2025, the average effective rent (inclusive of concessions) reached $79.67 per square foot annually across the San Francisco Bay Area, which is just 1% shy of 2019 levels.

Meanwhile, momentum appears to be carrying into 2026. At the trophy Transamerica Pyramid, a recently signed lease reportedly exceeded $300 per square foot, helping support the announcement of a possible upcoming sale of the building from Michael Shvo, BVK, and Deutsche Finance America to Yoda PLC. According to CompStak data, the current rent in place at Transamerica Pyramid averages approximately $144.51 per square foot, roughly 80% higher than the average current rent in place for Class A buildings in San Francisco.

With virtually no new construction in the pipeline, tenant demand is increasingly concentrated in top-tier assets. Effective rent trends illustrate how this flight to quality is supporting pricing in the upper tier of the market.

LOSS: Market Rents Still Trail In-Place Rents

While effective rents are stabilizing, repricing pressure remains significant. Across many buildings, tenants are still paying rents that exceed what CompStak estimates starting rents would be if signed today. This indicates possible limited near-term rent growth potential for landlords as leases roll.

Among the 11 major gateway office markets analyzed by CompStak, San Francisco and the broader Bay Area rank lowest in terms of the spread between estimated market rent today and current in-place rents for unexpired tenants:

• Bay Area: –2.8%
  
• San Francisco: –5.8%
  

Los Angeles is the only other major market showing a negative spread. In contrast, markets like Dallas-Fort Worth and New York City are currently showing positive spreads, signaling potential near-term rent growth.

Put simply, in San Francisco, estimated market rents are approximately 5.8% below current rents being paid by unexpired tenants. While stabilization may be underway, the data suggests rental rates remain below prior cycle highs, and current owners could face continued pressure as leases reset.

WIN: Large TAMI Leases Rebound and AI Demand Driving Big Deals

Demand from TAMI (Technology, Advertising, Media, and Information, including AI) tenants is providing another bright spot. In 2024 and 2025, the average TAMI transaction size increased to at or above pre-COVID levels. Even more notably, the share of TAMI leases that are 100,000 square feet or greater rose substantially above pre-pandemic norms, reaching:

• 14.9% of leasing activity in 2024
  
• 10.7% in 2025
  

Artificial Intelligence focused companies have played a meaningful role in this surge. In 2025, the largest tenant by total leased square footage in CompStak’s data was Databricks, which signed three Bay Area leases, including a major commitment at 200 West Washington Avenue in Sunnyvale. Overall, five of the ten largest tenants by total square footage leased in 2025 were TAMI companies, with two focused exclusively on artificial intelligence.  While broad-based demand remains uneven, certain growth sectors like AI are still placing strategic long-term bets on the region.

LOSS: Vacancy Remains Historically Elevated

Despite improving leasing activity, vacancy remains a structural challenge. According to the NCREIF Property Index (NPI), the San Francisco CSA vacancy rate measured 21.3% in Q4 2025, down modestly from its post-COVID peak of 22.4%.  However, that remains more than three times the 6.89% vacancy rate recorded in Q4 2019.

While the peak may be behind the market, absorption has not yet been strong enough to materially reverse the elevated vacancy levels that accumulated over the past several years.

WIN: Investment Sales Activity Is Reawakening

Another sign of momentum: investor interest in the San Francisco Bay Area office market is returning. Brokerage reports, including from Avison Young, noted that in 2025, San Francisco ranked as the largest office sales market nationwide based on trades during the first three quarters of the year, with pricing rising year over year for the first time since 2019. In addition, according to NCREIF data, transaction volume in 2025 reached its highest level since 2019, down 10.1% from that year, but:

• Up 150.4% from 2024
  
• More than 8x higher than the post-COVID trough in 2023
  

In Q3 2025, 5.8% of San Francisco CSA properties in the NPI traded, the highest quarterly share since Q2 2014,  followed by 4.2% in Q4 2025.

Much of this overall activity reflects investor appetite for discounted office assets, as buyers position for long-term upside tied to rising leasing stabilization.

LOSS: Repricing Has Been Severe

The rebound in transaction activity has come at a cost to sellers. An analysis of 2025 office sales in San Francisco and the broader Bay Area in CompStak’s data, comparing 2025 sale prices to their previous sale, shows:

• Median annualized price change: –9.8%
  
• 25th percentile: –16.5%
  
• 75th percentile: –4.6%
  

Discounts are widespread, though varying in magnitude. Notable examples include:

• 300 Howard Street, which traded in 2025 for $111 million, reflecting a –20.2% annualized decline from its 2019 valuation of $380 million.
  
• 1 Front Street, where a 25% stake sale valued the building at $255 million, an –8.1% annualized decline from its 2016 valuation.
  

While sellers have largely failed to recapture prior pricing, buyers are stepping in at substantial discounts. In some cases, those bets are already showing signs of payoff,  as illustrated by 300 Howard Street, which was fully leased to AI firm Anthropic following its sale.

Super Bowl LX delivered a decisive winner on the field. The Bay Area office market, however, remains a tougher game to call.

Trophy assets and AI-driven demand are scoring points, investment capital is returning, and rents at the top of the market are stabilizing. Yet vacancy remains elevated, and repricing pressures continue to weigh on the broader market.

As 2026 unfolds, the outcome will likely depend on whether sector-driven demand and investor interest can outpace structural vacancy and rent resets,  influencing whether San Francisco’s office market ultimately stages a full comeback.