Bay Area Office Inventory Shrinks by 12.9MM SQFT in a Year as Colliers Reclassifies Flex Space, Clouding Vacancy Comparisons
Why this matters
Office continues to trade in two distinct markets: trophy assets in walkable submarkets that are leasing at or near record rents, and commodity Class B and C buildings where the basis is still resetting. Underwriting on the latter has moved toward replacement-cost-minus, with credit underwriting now leaning on tenant covenant and remaining lease term rather than mark-to-market expectations. San Francisco continues to clear office at the deepest discounts to 2019 basis seen in the cycle, while multifamily fundamentals have stabilized and life sciences in the Peninsula remains active. For LP-positioned capital, the read-through is that the bifurcation is now a structural feature of the sector, not a cycle to wait out.
Editorial analysis · Real Estate Trail Editorial
On the RET wire
- The 100th San Francisco story tracked on the wire in November 2026. All San Francisco coverage →
- Disclosed office deal value tracked in November 2026: $7.6B across 42 reported transactions. All Office coverage →
- 78 stories mentioning Colliers on the wire in the past 90 days. Colliers coverage →
Computed from Real Estate Trail’s own tracked coverage
Colliers moved flex properties out of its Bay Area office count, leaving the tracked inventory 12.9 million square feet smaller than a year ago and making the region's 220-basis-point vacancy decline harder to read at…
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