SAN JOSE — The office vacancy rate in downtown San Jose has improved over the first half of 2025, while the same benchmark has worsened in both San Francisco and Oakland, new real estate reports show.
Along with improvements throughout the year, downtown San Jose’s office vacancy level in the April-through-June second quarter was well below its Bay Area counterparts, according to reports produced by commercial real estate firm Cushman & Wakefield.
Downtown San Jose’s office vacancy rate was 28.9% in the second quarter, an improvement from 30.9% in the first quarter.
Downtown Oakland’s office vacancy rate was 37.2% in the second quarter, up from 34.9% in the first quarter. San Francisco’s vacancy rate was 34.8% in the second quarter, slightly higher than the 34.7% rate in the first quarter.
The upswing for the downtown San Jose office market was aided by the purchase of a tower at 488 South Almaden Blvd. by the Santa Clara Valley Transportation Authority in May for $63.7 million.
“Downtown San Jose’s office vacancy rate saw a notable improvement in the second quarter, largely driven by significant user purchases, including the acquisition of 488 Almaden,” said Gabriella Sierra, research manager with Cushman & Wakefield.
Commercial property experts do not consider a building as vacant if it’s bought by the organization that will also occupy it. The purchases of at least two office buildings by occupants of the sites could help the city’s office market stabilize in the near term.
“This activity, coupled with a few office buildings being removed from inventory for residential conversion, collectively highlights a positive shift in downtown San Jose’s office market,” Sierra said.
Downtown San Jose is filling empty space at a greater pace than offices are becoming empty, Cushman & Wakefield reported. This metric, known as net absorption, determined that in the second quarter of 2025, downtown San Jose experienced positive absorption totaling 219,000 square feet.
Downtown Oakland filled 31,400 square feet more office space than became empty in the second quarter, Cushman & Wakefield reported. The city’s central business district experienced a lull in office space becoming vacant, which allowed even small or mid-sized leases to help fill space slightly faster than it emptied out.
PG&E’s decision to buy its downtown Oakland headquarters might bolster the market on a long-term basis.
“The second quarter recorded the largest office sale in Oakland’s history, with PG&E closing on a deal to purchase its 953,341-square-foot Oakland headquarters at 300 Lakeside for $906 million,” Cushman & Wakefield stated.
In San Francisco, about 346,000 square feet more office space became empty than was filled. Tech company departures during the April-June period helped to undermine the office market.
“Overall absorption remained negative, driven by several large move-outs, including the expiration of Google’s 365,000-square-foot lease at One Market Plaza and a new 182,000-square-foot sublease listing by Cruise,” Cushman & Wakefield reported.