As leases approach renewal, headcounts fluctuate and hybrid work patterns mature, business leaders across California are reassessing their real estate portfolios to determine whether their current footprint still supports the organization. The decision often comes down to a critical question:
In San Francisco and across the Bay Area, this decision carries added weight. While vacancy remains elevated, market conditions are beginning to stabilize. San Francisco’s office vacancy rate fell to 30.4% in Q1 2026, while the market recorded more than 2.2 million square feet of positive net absorption, signalling renewed demand for high-quality office space. Leasing activity has also been driven by continued growth from AI and technology companies.
For occupiers, this creates an opportunity to rethink workplace strategy before making a long-term real estate commitment.
Real estate decisions should never begin with square footage.
The most effective portfolio optimization strategies start by understanding how the business is evolving. Growth projections, workforce demographics, hybrid work patterns, cultural goals and operational requirements all influence how much space an organization truly needs.
A workplace that was designed five years ago may no longer support today’s ways of working. Teams may require fewer individual workstations but more project space, collaboration environments or client-facing areas. Others may discover they need less space overall, allowing them to reduce costs while improving workplace performance.
This process is often referred to as real estate right-sizing – aligning the workplace footprint with actual business needs rather than historical assumptions.
Many organizations assume relocation is the only path to improvement. In reality, remaining in place can often unlock significant value. A comprehensive stay-versus-go assessment evaluates:
The goal is not simply to compare costs, but to understand which option best supports long-term business outcomes.
In some cases, refurbishing and reconfiguring an existing workplace can improve utilization, reduce disruption and preserve location advantages. In others, relocation may provide access to better amenities, more efficient floorplates, stronger talent markets or future expansion opportunities.
Hybrid work has fundamentally changed how organizations use office space.
Recent occupancy data shows San Francisco office attendance continues to trail national averages, with hybrid work remaining the dominant model across many industries.
As a result, many occupiers are carrying more space than they actively use. Portfolio optimization allows organizations to:
At the same time, market conditions continue to reward organizations that act strategically. San Francisco’s leasing activity has strengthened significantly, particularly in high-quality Class A and amenity-rich buildings that support collaboration and innovation.
This ‘flight to quality’ means organizations have an opportunity to secure workplaces that better support performance, culture and business objectives.
One of the most common mistakes occupiers make is waiting too long to begin the process.
Industry best practice is to begin evaluating real estate options 12 to 18 months before a lease event. Complex projects may require even longer timelines to accommodate stakeholder engagement, workplace strategy, market searches, technical due diligence and change management.
Early planning creates flexibility.
It allows organizations to understand their options, negotiate from a position of strength and avoid making rushed decisions driven by lease deadlines.
It also provides time to evaluate multiple future scenarios, test workplace concepts and align stakeholders around a shared vision for the workplace.
The most successful workplace portfolios are measured by how effectively that space supports business performance. Whether the outcome is a lease renewal, workplace refurbishment, portfolio consolidation or relocation, the objective remains the same – creating a workplace that aligns people, operations and real estate strategy.
In a market like San Francisco, where occupiers have more options than they have had in recent years, organizations that approach portfolio optimization strategically will be best positioned to reduce costs, improve performance and create workplaces that remain relevant as business needs continue to evolve.
Whether you’re right-sizing, consolidating, relocating or reimagining your workplace, we’ll help you understand what’s possible and what makes the most sense for your business.
