San Francisco

San Francisco Bay Area Tech Office Leasing Activity Slows in the First Three Quarters of 2023 But Remains a Leading Force in Tech Jobs and VC Funding

The region was the top market for venture capital funding and among the most active markets for leasing by artificial intelligence companies

October 31, 2023

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The San Francisco Bay Area’s strong tech job growth in 2021 and 2022 and continued leadership in tech venture capital funding indicate long-term growth prospects, according to CBRE’s annual Tech-30 report.

The report, now in its 12th year, measures the tech industry’s impact on office demand and rents in the 30 leading tech markets in the U.S. and Canada, as well as select tech-heavy submarkets.

Tech leasing activity in San Francisco and Silicon Valley remained subdued in the first three quarters of this year as companies continued to right size or reduce their office footprints due to cost-cutting measures announced in late 2022. Nationally, tech reclaimed the highest share of U.S. office leasing in Q3 2023, after losing its lead in Q1 2022, but remains well below pre-pandemic levels. Tech’s share of office leasing was 16.5% (7.3 million sq. ft.) in Q3 2023, up from a 10-year low of 9.3% (3.9 million sq. ft.) in Q4 2022.

The report features a new analysis of the correlation between venture capital (VC) funding and leasing activity by AI companies. The top five U.S. markets to receive VC funding across all sectors between H1 2019 and H1 2023 (San Francisco, Silicon Valley, New York, Boston and Los Angeles/Orange County) also have the highest amount of office leasing activity by AI companies in that timeframe, according to CBRE’s analysis of its office leasing and CB Insights data.

Since 2019, AI companies have leased 7.5 million sq. ft. of office space across the top five markets. San Francisco and Silicon Valley were the most active markets for AI leasing by volume, each with over 2 million sq. ft. leased.

“Tech-office leasing has steadily increased this year across the U.S., but short-term momentum could shift along with the economy. To be sure, long-term growth prospects of the tech industry remain strong with ample capital to fund innovation,” said Colin Yasukochi, executive director of CBRE’s Tech Insights Center in San Francisco. “Investment in emerging technologies like artificial intelligence can produce significant economic value, employment and office space demand. The impact of AI on business growth has the potential to reach the same scale as the mobile internet, which would result in significant demand in the Tech-30 markets.”

Total U.S. tech industry employment remains well above pre-pandemic levels, even though tech software and services employment growth decelerated to 0.4% in H1 2023 from 3% in H2 2022. September 2023 marked the fewest tech industry layoffs since June 2022, according to CBRE’s analysis of data from job search firm Challenger, Gray & Christmas.

San Francisco ranked 9th in tech employment growth in 2021 and 2022 (14.2%), while Silicon Valley was 20th at 3.2%. Silicon Valley (43%) and San Francisco (38%) had the most concentrated tech industry workforce as a percentage of total office-using employment among the Tech-30.

Submarket Performance

Leading tech submarkets, which often are located near universities or major tech employers, typically feature higher rents, lower vacancy and high-quality office space than their cities. CBRE found that office rental rates in leading tech submarkets carried a 10.2% premium in Q2 2023, compared with rents for their cities as a whole. Silicon Valley’s Palo Alto had the second highest premium (57%) after Boston’s East Cambridge (107%).

Top Tech-30 Submarkets For Office-Rent Gains

Submarket Two-Year Submarket Rent Growth*
Downtown West (Toronto) 21%
River North (Chicago) 17%
Northwest (Austin) 15%
Tempe (Phoenix) 14%
Sorrento Mesa (San Diego) 14%
Far North (Dallas/Ft. Worth) 13%
Central Business District (Nashville) 13%
Lake Union (Seattle) 11%
RTP/I-40 Corridor (Raleigh-Durham) 9%
University City (Philadelphia) 8%

*Q2 2021 VS. Q2 2023

To read the Tech-30 report, click here.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at