Published on Thursday, July 9, 2026
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Companies are looking to lease roughly 10 million square feet of office space, according to a report from JLL.
Companies are looking to lease roughly 10 million square feet of office space in San Francisco this year – the highest annual total since 2019, according to a new JLL report on San Francisco office space in Q2.
Physical AI has pushed previously overlooked peripheral submarkets such as Showplace Square and the Dogpatch to the forefront, where the mix of office and production, distribution and repair (PDR) space is what robotics companies are seeking, according to Chris Pham, research manager at JLL.
"This has helped transform the Design District into one of the tighter micro markets where availability rates could drop in half within a year," Pham told GlobeSt.com.
Pham said he is surprised at how tight availability has become around Salesforce Park.
"Companies in this district may have to pay fees to upkeep the park and facilities depending on when their building was constructed," Pham said.
"Companies are willing to pay these fees to be close to a rare urban park and having easy access to transit shows the importance of urban amenities and the attraction of tenants to open space landmarks like the High Line in New York City."
Leasing activity has reached approximately 5.5 million square feet year-to-date, putting San Francisco on pace for its strongest leasing year since 2020, according to the report.
The city recorded roughly 600,000 square feet of absorption in Q2, marking the fourth consecutive quarter the category found itself in positive territory. This trend reduced total vacancy to 32%, down from 32.6% last quarter.
Citywide availability has fallen to 27.4 million square feet (31.3%), but the recovery is increasingly concentrated outside the traditional downtown core.
Residential-adjacent neighborhoods, including Mission Bay, Jackson Square and Showplace Square, continue to outperform, suggesting that companies increasingly want offices closer to where employees live rather than in the traditional central business districts.
Companies continue to pay a premium for high-quality workplaces, with average effective rents increasing by roughly 15% year-over-year to $66 per square foot. Full Bay Bridge-view offices now command approximately $140 per square foot, up from about $100 a year ago, while view-less space is only beginning to recover.