Class A Rates Keep Tumbling in San Francisco

Being a broker in this current economy keeps me on my toes. Office lease rates are moving pretty quickly (down that is). In some cases, rates have dropped quickly enough that tenants will start negotiations at one price and then come back with a lower number as they hear of other deals that come to light demonstrating more savings to be had. We have seen significant reductions in all Class A rates. Where buildings used to be asking rates in the 50’s - 60’s, they are now asking in the low to mid 40’s (or lower in some cases). It is not difficult to find Class A buildings offering mid 30’s and taking low 30’s deals.

What does all of this mean? It means that tenants have the chance to make a hay day of savings in some sweet spaces. I wouldn’t be surprised to see the rates slip quite a bit more over the next 6-9 months. Landlords beware… don’t trail the market down with your asking rates. You will be better off to be agressive and get a tenant locked into what appears to them to be a great deal (before the floor slips a little lower and tenants demand more).