Office vacancy rate rises in San Francisco

An amount of office space equivalent to 13 Bank of America buildings sits vacant in San Francisco today as companies continue to shed more square footage than they rent – a trend that won’t change until employers start putting more people behind desks.

The 13 million square feet of available space in the first quarter of 2010 translates to a 17.7 percent office vacancy rate, up from 14.7 percent a year ago and nearly one percentage point from the previous quarter ending in December, according to data released Friday by the real estate firm Jones Lang LaSalle.

Despite recent claims that the recession is waning and significant gains in the stock market, San Francisco’s unemployment rate, like that of other California cities, remains high at 9.9 percent – equating to approximately 45,000 potential workers. The state unemployment rate held steady at 12.5 percent in February.

Industries that continue to relinquish space include financial and other traditional professions. If there is expansion, it is in tech and biotech companies, according to Colin Yasukochi, research director at Jones Lang LaSalle.

“We are in a kind of transition period where more people are optimistic about the economy, but employment conditions have not necessarily changed for the better,” said Yasukochi. “Until that happens, we won’t see meaningful reductions in the amount of office space.”

Despite the fact that companies are continuing to give up space, new lease activity has picked up.

The amount of newly leased space in San Francisco during the first quarter of 2010 – 800,000 square feet – was up 8.2 percent from a year ago.

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