San Jose-area office market improves, San Francisco, Oakland get worse
Office vacancy levels improved in the San Jose area but worsened in both Oakland and San Francisco in the second quarter of 2025 compared with the first quarter of this year, new real estate reports show.
The upswing in the South Bay office market arrives on the heels of some big-time office leases in the region that have gobbled up some of the empty office spaces.
The vacancy rate for office buildings in the South Bay was 15.9% during the April-through-June second quarter of 2025, according to a new report released by Colliers, a commercial real estate firm.
The latest South Bay office vacancy level was an improvement from the 16.4% office vacancy level in the January-through-March first quarter of 2025, Colliers reported.
“Large lease and sale transactions in the second quarter of 2025 underscored a rebounding office market” in Silicon Valley, Colliers stated in its new report.
The downtown Oakland office market posted a vacancy rate of 29.1% in the second quarter, a jump from the 28.2% rate for that region in the first quarter, Colliers reported in a separate survey.
“Meek tenant activity,” along with “muted demand and limited leasing activity,” produced the worsening state of the downtown Oakland office market, Colliers stated in the latest report. “Tenants continued to reassess and adjust their space needs.”
San Francisco office market conditions deteriorated further in the second quarter, according to the real estate firm. Nearly one-third of San Francisco’s office spaces were empty in the April-through-June period.
“The citywide vacancy rate rose slightly to 31.2 percent, reflecting ongoing but moderated market pressure” in San Francisco, Colliers reported.
The 31.2% office vacancy level in the second quarter was worse than the 30.6% vacancy rate for the January-through-March first quarter, according to the San Francisco market survey.
Office vacancies are generally worse now than they were prior to the coronavirus outbreak.
To combat the spread of the deadly bug, state and local government agencies imposed wide-ranging business shutdowns, closures that kept workers away from their offices.
Although the shutdowns have ended, the return to the workplace has been uneven. Big employers, such as tech companies, have curtailed their appetites for office space.
The South Bay office market showed improvement in a crucial metric that’s called net absorption, which compares the difference between the amount of office space that is filled to the amount that becomes empty.
In the second quarter, the South Bay experienced 313,400 square feet of net absorption, which means that much more space became occupied through leases than became empty through tenant exits.
Plus, the positive net absorption is seen by Colliers as additional evidence of an improving office market in the South Bay. The real estate firm added that the improvement is stretching across a lengthening period.
“Absorption was positive for the third consecutive quarter, illustrating measured growth in the (Silicon Valley) region following six quarters of net occupancy losses,” Colliers stated.