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The San Francisco office market has seen a surge in new subleases as companies continue to adjust their future space requirements and elect to not reoccupy their office spaces indefinitely. More than 3 million square feet of sublease inventory is available as of August, up from about 300,000 square feet in March. This glut of sublease inventory will certainly lead to a drop in rental rates, which had reached an all-time high prior to the pandemic. I expect that we'll experience a prolonged period of price declines in the office market, as many start-ups will opt to either go fully remote or transition into smaller spaces with more flexible work-from-home policies.
With the advent of the global pandemic, we've seen a mass migration out of San Francisco into surrounding areas like Napa and Truckee. The hardest-hit areas have been SOMA and South Beach -- where there are mostly high-rise, loft, and condominium communities. Next year, we expect to see a return to the city as soon as offices reopen and in-person learning resumes. San Francisco has a history of being a resilient city, and while it will take time for some services and amenities to return, the desire to live in San Francisco will always be strong.
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