- San Francisco and New York are outperforming other US cities in office leasing activity, with SF recording a 158% increase over the past two years and NYC experiencing five consecutive quarters of positive absorption.
- Rents are stabilizing and even rising for Class A office spaces, with trophy offices in NYC commanding over $200 PSF and high-end SF spaces nearing $100 PSF.
- New leadership in SF and renewed economic activity in NYC are driving this resurgence, signaling a shift in sentiment toward urban office environments.
Once symbols of post-pandemic office distress, San Francisco and New York now lead a national office recovery, per Transwestern’s report. Robust leasing activity, tenant renewals, and positive absorption figures are fueling optimism in both markets.
Market Momentum In San Francisco
San Francisco’s office market has seen a dramatic turnaround. Leasing activity grew by 158% over the past two years, with Q3 2025 alone showing a 112% year-over-year surge. Average annual leasing growth has been 55% over the last three years, reflecting a significant recovery trajectory.
Vacancy dropped by 100 basis points for the first time since the pandemic, with rents stabilizing at $62 PSF. Class A rents increased to $74.50, and premium view spaces now reach $100 PSF with a 5% vacancy rate.
Positive Q3 absorption of 64,144 SF pushed 2025 totals past 115K SF, driven by strong demand in the Financial Districts.
New York’s Steady Climb
New York City logged five straight quarters of positive absorption, fueled by strong leasing in both Class A and B office assets. In Q3 2025, leasing activity rose 34% year-over-year, with deal sizes rebounding over 40% from 2023 lows.
The average asking rent for top-tier office space exceeds $200 PSF, while Class B rates are inching upward due to limited availability in higher-tier properties. Availability has dropped 390 basis points over two years.
Beyond The Metrics
Economic indicators reinforce the rebound:
- Bay Area VC funding remains dominant, with $150B raised year-to-date, accounting for 54% of the US total. Notably, AI startups alone secured $98B, or 75% of national AI VC funding.
- NYC saw $23.3B in VC funding year-to-date, up 42% over two years.
- Office attendance is up — 42.5% in SF and 53% in NYC — with retail foot traffic rising in both cities.
San Francisco’s new mayor, Daniel Lurie, has made revitalization a priority, injecting energy into the downtown core with business-friendly policies and public visibility. Meanwhile, New York’s next mayor is pushing for higher corporate taxes and affordable housing — policy shifts that could reshape its commercial landscape.
Why It Matters
The rebound of two major office markets signals a broader shift in sentiment toward urban commercial real estate. Demand for premium space is rising, vacancies are falling, and investors are returning—showing urban office life is far from obsolete.
What’s Next
With limited new construction in the pipeline, increased demand could drive rents higher in both markets. Investors are acquiring assets with an eye on redevelopment, and public policy will play a key role in shaping the next chapter of urban workspaces.
Expect other major US metros to follow — cautiously but optimistically — as the country’s office sector adapts to post-pandemic realities and surging demand for high-quality, centralized workspace.
