San Francisco's office leasing market has experienced a remarkable turnaround, with a reported 77% increase in leasing activity during the third quarter of 2026. This surge resulted in a total of 3.9 million square feet leased, contributing to a decrease in office availability to 27%. According to ConnectCRE, this shift in market dynamics is favoring landlords, driven largely by rising demand from artificial intelligence firms 4.
One notable example of this trend is the robotics AI startup Physical Intelligence, which has secured an 80,964-square-foot sublease at 850 Brannan St. in San Francisco. This expansion marks a significant growth from the company's earlier plans, underscoring the increasing demand for office space among tech firms in the region 3.
In addition to the surge in leasing activity, stability in the office market is also evident. NXP Semiconductors has renewed its lease for 96,502 square feet at 350 Holger Way in North San Jose. This renewal reflects a consistent demand for office space within the tech sector, as the company continues its operations in a Class A research and development building 2.
Meanwhile, in Kansas City, the Valencia Place, a 250,000-square-foot office building, is seeking new tenants. CBRE has been appointed as the exclusive leasing agent for this property, which has historically housed Lockton Companies. This move indicates ongoing interest in prime office locations despite broader market challenges 1.
Overall, the San Francisco office market is showing signs of recovery and growth, particularly in the tech sector, as companies expand their footprints and renew leases in response to increasing demand.
Sources
- ConnectCRE — Price Brothers Awards CBRE Leasing Assignment for KC Office Asset
- The Registry (Bay Area) — NXP Semiconductors Renews 97,000 SQFT at 350 Holger Way in North San Jose
- The Registry (Bay Area) — Physical Intelligence Locks In 81,000 SQFT Sublease at 850 Brannan St., Outgrowing Its Earlier San Francisco Plan
- The Registry (Bay Area) — Savills: San Francisco Office Leasing Jumps 77% as Availability Falls to 27%