Q3 2025 San Francisco Peninsula Office Report

The San Francisco Peninsula office market, which encompasses all office
buildings in San Mateo County, recorded 97,893 square feet of net
absorption in the third quarter of 2025. This figure indicates a potential
turning point for the region, which had previously experienced eight
consecutive quarters of occupancy loss.

Net absorption was driven by a 42.7% increase in gross absorption quarterover-quarter, totaling 1.2 million square feet, driven by activity in large block
space. The largest occupancy gain of the quarter was from Roblox, which
leased 408,225 square feet this quarter across two transactions at Bay
Meadows in San Mateo, followed by the completion of an owner-user
building at 1350 Grundy Way in San Bruno by a major tech firm.
Additionally, Moloco’s 58,800-square-foot sublease of 135 Commonwealth
Drive in Menlo Park, and Atria’s 44,865-square-foot lease at 333 Middlefield
Road, also in Menlo Park, suggested that the uptick in activity was
sustainable, as demand for office space of all sizes returned to the region.
Despite the net increase in occupancy, the overall vacancy rate rose to
18.9% quarter-over-quarter, reaching a new historical high. This upward
movement was largely attributed to the completion of two buildings in
Redwood City’s Elco Yards development, which added 515,500 square feet
of vacant space to the market. Overall availability, however, which includes
occupied space actively being marketed for lease, fell 40 basis points to
21.9% quarter-over-quarter, suggesting that the inflow of new space to the
market has begun to taper.

Asking rents increased 1.3% to $6.25 FSG, driven by a combination of new
shell space such as Elco Yards entering the market, as well as older office
product like the 380,000-square-foot Clearview Business Park in San Mateo
being removed from inventory for redevelopment. While too early to draw
definitive conclusions from a single quarter of occupancy gains, the
combination of increasing demand from office tenants as well as historically
high levels of office space seem to indicate that the office sector is poised
for growth throughout the remainder of the year.

Source: Colliers Q3 2025 Office Report | San Francisco Peninsula