San Francisco’s commercial real estate sector has faced sustained turbulence in recent years. The once-vibrant downtown corridors filled with bustling tech firms and innovative startups have quieted considerably since the onset of remote work and broader economic shifts. While vacancy rates remain high and many buildings sit underutilized, there is one segment of the market that stands as a bright spot: high-end, Class A office spaces in prime locations that cater to forward-thinking firms prioritizing quality over quantity.
The broader market dynamics are clear. Remote and hybrid work models, which gained traction during the COVID-19 pandemic, continue to influence how companies think about office space. Rather than large floorplates and expansive campuses, many businesses are seeking efficiency and quality. They are downsizing their footprints while upgrading the physical environment for employees who do come into the office. This flight to quality has created a bifurcation within the office market: older buildings with outdated infrastructure are seeing rising vacancy, while premium spaces are in relatively higher demand.
These Class A properties often include new construction or recently renovated buildings offering high ceilings, natural light, sustainable materials, advanced HVAC systems, and top-tier amenities. Tenants are increasingly attracted to environments that support health, collaboration, and productivity. Rooftop terraces, fitness centers, and well-designed common areas are now essential components of the most sought-after spaces.
In San Francisco, some of the most active leasing activity is occurring in neighborhoods like South of Market (SoMa), the Financial District, and Mission Bay, where these premium offerings are clustered. While the overall citywide office vacancy rate hovers near historic highs, certain buildings in these areas are reporting strong occupancy and leasing interest.
Tech companies, traditionally dominant in the city’s office landscape, have played a significant role in driving this trend. Although many have reduced their office footprint, they are still seeking symbolic and functional headquarters in strategic locations. A smaller but more refined office in downtown San Francisco serves as both a hub for in-person collaboration and a statement of presence. This evolving approach has led to renewed interest in the top-tier office segment.
Another contributing factor to the strength of this market segment is the increased focus on employee experience. As companies aim to entice employees back into the office, they understand the importance of offering a workspace that feels better than working from home. This shift in mentality has helped support demand for upgraded, amenity-rich offices. Employers want to create an environment that fosters culture, collaboration, and innovation—and that requires more than just square footage.
Investment patterns in the city reflect these dynamics. Developers and landlords are channeling capital into retrofitting older buildings to meet modern expectations. Even in a challenging market, there are significant renovations underway, targeting LEED certification, smart building technologies, and improved air quality systems. While the return on such investments may take time, the long-term bet is that premium space will remain in demand, even as total demand contracts.
Sublease activity also offers insight into the ongoing recalibration. Companies that over-leased during the pre-pandemic boom are now shedding space, often placing surplus offices on the sublease market. However, much of this subleased space is clustered in less desirable buildings or locations. The top floors in newer towers, with panoramic views and upgraded interiors, are less frequently listed for sublease. This discrepancy further highlights the flight to quality.
Leasing incentives remain generous, even in this higher-performing segment. Landlords are offering tenant improvement allowances, rent abatements, and flexible lease terms to secure commitments. However, the concessions tend to be smaller for the most desirable properties, where competition remains relatively strong.
Economic headwinds remain, and the city’s office market is far from a full recovery. Structural changes in workplace culture, rising interest rates, and tech sector volatility all present ongoing challenges. But the resilience of Class A properties suggests that not all is lost. These spaces are not immune to broader market forces, but they are better positioned to weather the storm and emerge stronger.
For the city of San Francisco, this segment offers a foundation for renewal. A thriving market for premium office space can support surrounding businesses—from cafes and restaurants to transit providers—and help restore vibrancy to urban neighborhoods. While remote work has reshaped the downtown core, it hasn’t eliminated the need for high-quality work environments. The demand has simply become more selective.
As the office market continues to evolve, the role of design, location, and amenities will only grow in importance. The companies that are returning to in-person operations—whether on a hybrid basis or otherwise—are looking for more than just desks and conference rooms. They want a space that reflects their values and supports their people.
The path forward may involve continued transformation. Older office buildings could be repurposed for residential or mixed-use applications. The city may need to rethink zoning, transit, and public safety to attract and retain employers. But amid the uncertainty, one message is clear: quality still matters.
The bright spot in San Francisco’s office space market is not a solution to all its problems, but it is a signal. It shows that there remains a willingness among businesses to invest in physical workplaces when the offering is right. For landlords, developers, and city planners, this presents a roadmap: to revive demand, the focus must be on excellence, adaptability, and long-term value.
As San Francisco continues to grapple with its post-pandemic identity, the success of its premium office market could serve as a template for renewal. It may not be the boom of the past decade, but in a time of transition, even a glimmer of resilience is a hopeful sign.