San Francisco Office Market Report: Q1 2026

Anica Petkovic • Research • April 07, 2026 • Time reading: 4 min

San Francisco opened 2026 with its strongest leasing quarter since 2014, signaling faster tenant velocity in the market.

Leasing reached 3.8 million square feet (msf) in Q1 2026—San Francisco’s strongest leasing quarter since 2014—driven largely by accelerated growth from AI and advanced technology firms.

At a national level, major brokerages are also pointing to a more selective but improving office cycle—where demand is concentrating in the best-performing markets and where sublease supply is beginning to contract. In that context, San Francisco is showing up as a leading “reset” market with measurable progress.

Key Market Metrics

Inventory: 91.0 msf (down from 91.3 msf a year ago)
Quarterly leasing activity: 3.8 msf (up from 3.4 msf in Q1 2025)
Availability rate: 29.2% (down from 35.6% in Q1 2025)
Overall asking rent: $66.38 PSF (vs. $66.33 PSF a year ago)
Class A asking rent: $72.91 PSF (vs. $72.51 PSF a year ago)
Available sublease space: 4.4 msf (down from 6.8 msf a year ago)

Market drivers: AI-led growth and faster decision cycles

The quarter’s strength is attributed to the accelerated growth of AI and advanced technology firms, which have emerged as a primary demand engine in the city.

That theme aligns with broader market commentary: growth sectors are moving quickly, prioritizing proximity, collaboration, and the ability to execute—often favoring spaces that can be occupied sooner rather than later.

Demand is improving, but the recovery is concentrated

The U.S. office market is “beginning to stabilize,” with improving demand, flat vacancy, and a sharp pullback in new supply.

However, they also stress that momentum is not evenly distributed—recovery is increasingly concentrated in leading markets and in buildings that align with today’s tenant preferences.

That pattern matters for San Francisco. It implies that “the market” is not moving as one: the strongest performance is expected to show up first in well-located, higher-quality space—while older, less competitive inventory may lag.

What the national data says specifically about San Francisco

San Francisco posted +2.4 msf of absorption over the past four quarters and recorded the largest year-over-year reduction in sublease space of any U.S. market.

Both points are meaningful:

Positive absorption over four quarters suggests net demand has improved beyond one-off headline deals.
Sublease contraction typically signals that tenants are either growing, recommitting, or that discounted “shadow inventory” is being absorbed—often an early indicator of improving fundamentals.

Q1 2026 leasing: a volume milestone

Savills reports 3.8 msf of leasing in Q1 2026, the city’s strongest quarter since 2014.

The top-line takeaway is straightforward: tenant velocity returned at a scale San Francisco hasn’t seen in over a decade, and the demand mix is being materially shaped by advanced technology growth.

Notable Leases to Watch

A few of the quarter’s notable deals underline the flight to quality and the depth of tech-led demand:

Anthropic — 300 & 342 Howard St. (Financial District South): 479,172 SF (new location)
OpenAI — 1800 Owens St. (Mission Bay/Showplace Square): 280,000 SF (new location, sublease)
Atlassian — 350 Bush St. (Financial District North): 122,198 SF (renewal)
Charles Schwab — 425 Market St. (Financial District South): 115,014 SF (relocation)
Databricks — 1 Sansome St. (Financial District North): 87,387 SF (expansion)
Perplexity — 181 Fremont St. (Financial District South): 80,561 SF (relocation, sublease)

Strategic implications for owners and tenants

For tenants:

Q1’s pace suggests that competitive processes can re-emerge quickly for the most “right-now” product—especially well-built, move-in-ready space that supports dense collaboration. That doesn’t mean leverage disappears across the board, but it does mean speed and optionality are becoming more important in the search process.

For owners:

The market’s progress is real, but it’s also increasingly bifurcated. Buildings that meet the market—through usable layouts, amenity upgrades, and flexible deal structuring—are more likely to capture the next wave of demand. Properties that don’t may find themselves competing primarily on concessions.

Outlook: stabilization, not a uniform rebound

Even with strong Q1 leasing, broader office conditions remain defined by selectivity. Cushman & Wakefield notes that Q1 national absorption was still negative at -4.0 msf, but that the four-quarter rolling absorption total improved to +5.2 msf (the highest since early 2020)—a reminder that quarterly snapshots can mask longer-trend improvement.

For San Francisco, the takeaway is less about declaring a blanket recovery and more about recognizing what’s working: AI-led demand, faster leasing decision cycles, and the continued re-pricing and repositioning of space—especially in buildings that can deliver high-performance occupancy.