California Commercial Office Vacancy Rates by Market — Q1 2026
California's office market looked steadier in early 2026 than it did two years ago, but the recovery was far from even. Here is how the major markets stacked up.
California Commercial Office Vacancy Rates by Market — Q1 2026
California's office market looked steadier in early 2026 than it did two years ago, but the recovery was far from even. A mixed-source review of major Q1 2026 market reports shows a clear divide between the state's healthier Southern California office markets and the still-elevated vacancy conditions in Los Angeles, Sacramento, and especially San Francisco.
Key Figures at a Glance
| Market | Q1 2026 Vacancy | Primary Reference |
|---|---|---|
| San Diego | 15.4% | Cushman & Wakefield |
| Orange County | 15.7% | Newmark |
| Sacramento | 21.3% | Colliers |
| Los Angeles | 25.1% | Newmark |
| San Francisco | 31.7% | Transwestern |
San Diego posted the lowest vacancy in this comparison at 15.4%, followed closely by Orange County at 15.7% — reinforcing the idea that Southern California's better-positioned office markets have been stabilizing faster than the state's largest gateway markets.
Sacramento sat in a more pressured middle range at 21.3%. That leaves it in an unsettled position: better than the most stressed gateway markets, but not as tight as the strongest Southern California peers.
Los Angeles remained clearly elevated at 25.1%, with vacancy still hovering in the mid-20% range even as leasing activity improved and parts of the market showed signs of stabilization.
San Francisco remained the most stressed market in this set at 31.7%. Even with momentum improving and vacancy falling from year-ago levels, it still sat well above the rest of the California markets reviewed here.
What the Q1 2026 Split Tells Us
The headline takeaway is straightforward: Southern California's stronger markets held up materially better than the state's two largest gateway cities.
San Diego and Orange County clustering near the mid-teens reflects a combination of factors — more suburban and amenitized inventory, a more diversified tenant base, and less exposure to the tech-sector contraction that hit San Francisco particularly hard. Both markets still carry vacancy above pre-pandemic norms, but the gap between them and the stressed end of the spectrum is significant.
Los Angeles and San Francisco continued to carry more of the post-pandemic vacancy burden. In Los Angeles, the story is one of slow, uneven improvement — leasing activity has picked up in select submarkets, but the overall vacancy rate remains well above historical averages. San Francisco's situation is more acute: even with vacancy declining from its peak, a rate above 30% means a substantial share of the city's office inventory remains unoccupied.
Sacramento's position in the mid-20% range is worth watching. As a government and healthcare-anchored market, it has historically been more insulated from private-sector volatility. The elevated vacancy reading in this comparison may partly reflect methodology differences across research providers, but it also signals that the market has not been immune to broader demand softness.
Q1 2026 vs. Prior Years
California office looked more stable in Q1 2026 than it did in 2024, but the recovery was still uneven. Nationally, first-quarter absorption and vacancy trends pointed to a firmer backdrop than the market faced two years earlier.
Within California, though, the story remained highly local. Southern California's stronger suburban and amenitized office markets held up better, while Los Angeles and San Francisco continued to carry more of the post-pandemic vacancy burden.
Because this comparison mixes multiple research providers, the precise percentages should be read as directional rather than perfectly standardized. The more important takeaway is the ranking itself: Southern California's stronger markets remained healthier, while Los Angeles and San Francisco still sat at the stressed end of the spectrum.
What This Means for CRE Borrowers and Investors
For investors and borrowers evaluating California office assets, the market-level vacancy data reinforces a few practical considerations:
Underwriting assumptions matter more than ever. A 15% vacancy market and a 32% vacancy market require very different rent growth, absorption, and stabilization assumptions. Lenders — including Resolution Equity — are scrutinizing these inputs closely on office deals.
Submarket selection is critical. Even within a high-vacancy metro like San Francisco or Los Angeles, individual submarkets can perform very differently. Well-located, amenitized buildings in strong submarkets have continued to attract tenants even as overall vacancy climbed.
In-house financing can move faster. For investors who have identified the right asset and submarket, having access to a lender with in-house commercial underwriting — rather than waiting on a committee process — can be a meaningful advantage in a market where motivated sellers and distressed assets are creating time-sensitive opportunities.
If you are evaluating a California office acquisition or refinance and want to talk through the financing side, contact our team for a direct conversation.
Core Sources
This comparison pulls from a mixed set of Q1 2026 market reports rather than relying on a single research provider. Because brokerage firms define market boundaries, inventory, and vacancy methodology differently, these figures should be read as a directional statewide comparison rather than a strict apples-to-apples benchmark.
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