Office Vacancy In San Francisco Rises Further
USA – Data from property consultancy CBRE showed that the office vacancy rate in San Francisco has increased to 31.6 percent in Q2 2023 from 29.4 percent in the previous quarter, reported Newsweek on Tuesday evening (11 July, SGT).
Before the COVID-19 pandemic, the office vacancy level in the city stood at just 4 percent, said Colin Yasukochi, the Tech Insight Center Executive Director at CBRE.
CBRE revealed that during the April-to-June period, a net 1.83 million square feet of office space was vacated in the city. This means a net 3.4 million sq ft of workspace was relinquished during the first six months of the year.
Overall, more than 35 million sq ft of office space in San Francisco lies vacant, noted NBC Bay Area.
The districts that have the highest office vacancy rates, as per NBC and CBRE, are South of Market West (38 percent), South of Market (42.5 percent), and Yerba Buena (54.5 percent).
During the COVID-19 pandemic, San Francisco saw an outflow of employees who relocated to smaller towns where the cost of living is lower and began working remotely. Even after the end of the health crisis, many workers have opted not to return to their offices or to the city.
This has resulted in many buildings that are partially or mostly empty, impacting the retail scene and causing a significant fracture in how the city used to work, noted Lu Chen, a San Francisco-based economist at Moody’s Analytics.
“If we look at the city as a whole, you have retail, offices, and residential all supporting each other. Now there’s actually a broken network among different linkages of commercial properties.”
Furthermore, the elevated office vacancy level is negatively affecting San Francisco’s economy “beyond its impact on commercial real estate itself,” noted the city’s Chief Economist Ted Egan.
“It is contributing to a loss of business tax revenue to the city, and a loss of ridership for local transit agencies. It has also harmed small businesses located downtown, who don’t have the same foot traffic from office workers eating lunch, meeting after work, or shopping during the day. It is also curtailing business tourism,” he added.