You’ve heard from the downtown businesses, which used to host busy lunch crowds and happy hour hordes, for over a year that the area is a ghost town most days. But not just because the companies that are still around let everyone work from home.
Office vacancy rates have been fairly high in San Francisco for many months, but new data for the fourth quarter of 2022 just showed vacancy hit another pandemic-era high at 24 percent, up from 23 percent in the previous quarter. As Socketsite reports, using data from real estate company Cushman & Wakefield, that equates to around 21 million square feet of office space that is vacant.
Demand for office space also continued to decline by around 20%.
21 million square feet, just to think of that number, is the equivalent of many, many empty buildings and whole floors of buildings. With Salesforce Tower’s 59 office floors totaling 1.35 million square feet, that means 15.4 Salesforce Towers worth of offices are currently vacant in SF, Socketsite explains.
Or, to put it another way, you take an empty floor of Salesforce Tower and multiply by 909 – that’s how many office floors are empty, downtown and elsewhere in the city.
Salesforce itself has subleased space it used to fill with its own employees, outsourcing hundreds of thousands of square feet in buildings near its eponymous tower over the past two years.
Commercial real estate firm CBRE noted in December that San Francisco’s office vacancy rate had just hit its highest level since 1993. They actually put the vacancy rate higher than Cushman & Wakefield, saying it was 27.1 million square feet — or the equivalent of 20 Salesforce Towers.
“The problem started with the pandemic,” Colin Yasukochi, executive director of CBRE at the Tech Insights Center, told CNBC. “Before the pandemic, our office vacancy rate in the city of San Francisco was around 4%. That meant 4% of the total space, the millions and millions of square feet of space that we had in the city, was empty. Today that number is closer to 26%.”
Last fall, as the city’s office vacancy rate continued to rise, former city warden-turned-MP Matt Haney began promoting a proposal to convert vacant office buildings into apartments — but that idea likely involves many, many years of wrestling about zoning changes to figure out which buildings would be best for housing, and then the actual renovation and retrofitting of those buildings.
SF-based architecture firm Gensler conducted such a theoretical project for the city of Calgary, as reported by KRON4. They eventually identified a group of buildings from the ’50s and ’60s with plenty of access to light and easily convertible floor panels.
However, an expert speaking to the Chronicle last fall suggested that given current construction prices, projects like this – like the conversion of 100 Van Ness into rental units a decade ago – are not viable in current economic conditions. However, they could become viable if the cost of building materials and local permitting delays “fall off a cliff”.
Until now: SF Tech companies are losing hundreds of millions in office space they can’t rent
Photo by Georg Eiermann
