San Francisco Bay Area Contributes Major Deals to Large Office Leases in 2022

San Francisco, San Francisco Peninsula, East Bay and Silicon Valley claimed 13 of the top 100 U.S. office leases in 2022, according to a new report from CBRE.

Silicon Valley had the third-greatest share of the 100 largest office leases in 2022, with six transactions totaling 2.2 million sq. ft. More than 1.6 million sq. ft. were new leases by the technology sector. San Francisco had three transactions, totaling 1.2 million sq. ft.; nearly 600,000 sq. ft. were new leases by tech and retail trade companies. The San Francisco Peninsula (San Mateo County and Palo Alto) had three leases in the top 100, totaling 1.1 million sq. ft., signed by companies in the tech sector. There was one lease in the East Bay signed by an energy company.

                         Markets With Largest of the Large Office Leases of 2022

Tech remained a primary driver for those of the top 100 leases found in the four Bay Area markets. Its nine tech leases, totaling 3.3 million sq. ft., accounted for more than half of the U.S. tech total. In 2021, the Bay Area had eight tech leases in the top 100 U.S. office leases.

“The tech industry remains the dominant sector making large office space commitments in the Bay Area even though their leasing activity slowed in the second half of 2022,” said Colin Yasukochi, Executive Director of CBRE’s Tech Insights Center. “Uncertainty about remote and hybrid work and the macroeconomic environment caused the tech industry, and others, to adjust their real estate portfolios. We have experienced similar cycles in the past and the tech industry adjusts quickly and positions itself for the next growth cycle. Because of this, I am optimistic about the tech industry in the long run.”

Nationally, tech companies accounted for 17 of the largest 100 leases, down from 36 in 2021. CBRE only started tracking the 100 largest office leases in 2020, but tech led in overall U.S. office-leasing activity from 2013 through 2022. Meanwhile, finance and insurance companies claimed 25 of the largest 100 office leases of 2022 by square footage, up from 12 in 2021.

Other industries that expanded their share of the largest 100 leases last year, beyond finance and insurance, include business and professional services (eight leases in 2022), creative industries (five), retail trade (seven), energy (five) and manufacturing and transportation (five). Those that registered fewer of the top leases in 2022 than in 2021, in addition to tech, include government and nonprofits (nine), life sciences (four) and legal (four).

The percentage of the largest 100 that were new leases declined to 53% in 2022 from 61% in 2021. That might be due to large companies avoiding the higher interest rates and construction costs of a move by instead staying put and renewing their expiring leases.

To read the full report, click here.