Class A office space leads tenant demand amid San Francisco's Peninsula leasing decline
- Class A space currently makes up 82.2% of leasing activity QTD compared to 61.7% last quarter along the San Francisco Peninsula. While leasing activity YoY has decreased by 42.5%, tenants are focused on premium space with great amenities and proximity to public transit. Class A leases, as a percentage of total leasing activity QTD, have reached a 9-year high with three weeks remaining in Q4 2025.
- This quarter, AI companies are directly impacting this class A leasing trend on the Peninsula. Companies including Upstart, Fireworks AI, and Kaliber AI are leasing and subleasing in higher end buildings driving the Peninsula’s leasing activity, leaving class B and C buildings at a 9-year low as a percent of total leasing activity at 17.7% QTD.
- San Francisco Peninsula class A asking rents have declined from their 2022 peak by more than $8 psf. These properties continue to capture the highest share of QTD leasing activity as tenants capitalize on more favorable pricing to secure premium space. This trend indicates strong tenant preference and makes a clear case for landlords to invest in upgrades to stay competitive.
December 15, 2025
Get market intel
US-CA-SM San Mateo