Market velocity decelerates amidst global coronavirus outbreak

  • Before the recent COVID-19 pandemic, San Francisco was beginning to see signs of an office market deceleration, brought on by low vacancy rates amidst persistent but slowing tenant demand. In Q1 2020, the slowdown began to appear across most published measures.
  • Strict stay-at-home orders now in place are leading the U.S. economy into a recession with a very sharp GDP decline estimated for H1 2020. The first job losses are concentrated in the retail, food & beverage and transportation sectors but no one industry is spared from the stress.
  • Rent growth slowed in 2019 as availability rates rose. While Q1 2020 posted the 43rd consecutive quarter with a quarterly increase, the growth rate was only 0.2%, quarter-over-quarter and 6.7% year-over-year.