New report reveals at least a quarter of all office space still vacant in downtown San Jose, Oakland and San Francisco

George Avalos, The Mercury News on May 22, 2025

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SAN JOSE, California — Sky-high downtown office vacancy rates continue to haunt San Jose, Oakland and San Francisco as at least one-fourth of those spaces remain empty in all three urban cores, according to a new report from commercial real estate firm Colliers.

The Colliers report provided to this news organization covers the latest statistical period available – January through March of this year.

During that time period, downtown San Jose had the highest office vacancy rate among the three major Bay Area cities. Its rate of 30.6% was slightly worse than the 30.2% rate in the first quarter of 2024, but lower than the 31% rate in the fourth quarter of 2024.

San Francisco had the second-highest vacancy rate with 29.6%. That figure is higher than the 28.2% rate in the first quarter of 2024 and unchanged from the fourth quarter of 2024, Colliers reported.

Downtown Oakland reported a vacancy rate of 26.5% in the first quarter of 2025, which was up from the 20.5% rate in the first quarter of 2024 and worse than the 25.9% rate in the fourth quarter of 2024.

“We are seeing a built-in vacancy rate in these downtown areas that doesn’t appear to be going away,” said Mark Ritchie, president of Bay Area real estate firm Ritchie Commercial. “Post-COVID, we are seeing office vacancies remain high. There are a certain number of buildings that will not have a useful purpose again as an office space.”

Among the three cities, only downtown San Jose showed some improvement. But even that good news came with plenty of qualifiers.

“Most deals signed in downtown San Jose were relatively small, that is, less than 25,000 square feet,” Derek Daniels, Colliers regional research director for the Bay Area, said in an email to this news organization. “Unlike other metros, downtown San Jose is not considered the most premier market.”

While downtown San Jose rents are lower than other Silicon Valley office markets such as Palo Alto and Mountain View, vacancy rates remain higher as other South Bay cities grab a larger share of South Bay office rental deals, Colliers reported.

In 2024, downtown San Jose captured 3.6% of new leases, subleases and renewals, according to Colliers. Meanwhile, central Palo Alto landed 6.5% of office rental transactions and central Mountain View landed 8.2%.

Downtown Oakland is facing its own fair share of challenges.

“Oakland’s central business district remained under pressure in the first quarter of 2025, continuing a trend of elevated vacancy seen across the broader market,” Colliers reported. “Leasing activity was limited and largely driven by small renewals and short-term commitments.”

Tenants are in the middle of a wide-ranging assessment of their space requirements, according to the report.

“Leasing activity was concentrated among small-space occupiers, particularly in the nonprofit, legal, and financial sectors” in downtown Oakland, the Colliers survey stated, adding that overall in the first quarter, tenants were taking a wait-and-see approach regarding downtown deals.

San Francisco’s downtown office market failed to make any progress primarily because large deals that did occur were relocations within the city or renewals of existing rental agreements, according to the report. “Outside of the handful of large block transactions, the great majority of leases signed in San Francisco were for partial and single-floor spaces,” it said.

Despite the rough office market conditions in the Bay Area, Colliers did offer some hopeful signs for downtown San Jose.

“Downtown San Jose does excel in one aspect: population,” Colliers reported.

Population levels in the Bay Area’s largest city as well as in the city’s downtown could help induce companies to lease space, especially in Santana Row.

The mixed-use neighborhood has enjoyed a leasing boom for its new Santana West office building in recent months.

“Despite trailing in the office market, San Jose commands a whopping 44.4% of all multifamily residential units across the Santa Clara Valley,” Colliers reported. “Downtown San Jose comprises 8% of total market share alone.”