As we outlined last week, the amount of vacant office space in San Francisco has ticked up to a pandemic high of 18.7 million square feet versus under 5 million square feet prior to the pandemic.

For context, the 1,070-foot-tall Salesforce/Transbay tower at First and Mission, which is the tallest building in San Francisco, contains 1.35 million square feet of office space spread across 59 floors.  And employing the framework we introduced back in 2020, there is now 13.8 Salesforce Towers or 815 Salesforce Tower floors worth of empty office space spread across San Francisco, which is roughly enough space to accommodate between 107,000 employees, based on an average, pre-Covid density or 143,000 (a la twitter) worker bees.

And while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to the relative value of each use and the cost of conversion.

67 thoughts on “Visualizing All the Vacant Office Space in San Francisco”
    1. While landlords have been holding firm, and asking rents have actually ticked up over the past couple of quarters, “the increase in asking rents is due in large part to the rise in direct vacancy (typically priced higher than sublease) accounting for a larger share of the total in the first quarter compared to previous quarters during the pandemic,” and rents in top tier buildings “have held strong and, in some cases, climbed higher over the past few quarters as the flight to quality continues,” according to Cushman & Wakefield.

      At the same time, the rise in direct vacancy rates should put downward pressure on average rents and second tier properties, including within the Class A space, going forward.

      1. anecdotal. we got a 2.5 yr sublease on the embarcadero for 55% less than current tenant is paying. I imagine the sublease market is more telling of whats happening real-time

        1. I would thinking what is actually being signed – be it direct or sub-lease – is more telling than the “asking” numbers bandied about.
          And if I may be so bold – it’s in the name of research…honest!! – what is that amount ??

        2. Lease, sublease or not, isn’t there a catastrophic foreclosure crisis on the immediate horizon in SF? These mostly empty buildings MUST have property owners that can’t meet their financial obligations (loan or mortgage payments). Banks as a result should be on the verge of collapsing.

          1. If the buildings are vacant and on the sublease market, that implies that the tenant with the lease is still paying rent and is trying to recover some of their costs, no? In that kinda situation, the property owner doesn’t care, they are still collecting their rent (as in the case of Shorenstein Properties and the office space they are leasing to Twitter that Dave keeps going on about).

            Sure, you can claim based on simplistic supply and demand models that the space being available on the sublease market increases supply of vacant space and therefore marginally contributes to lower prices for office space, but I don’t buy it. Office space isn’t some kind of fungible commodity.

            In case you weren’t an adult in 2009, let me tell you that it’s highly unlikely that property owners of office buildings will cause banks to even get close to collapsing. If they did, the government of the U.S. would step in and bail them out, because in this country we effectively have socialism for fatcat bankers and the discipline of markets and the concept of moral hazard applied to everyone else.

  1. If office landlords don’t have class “A” space with pano views of the bay, then they can’t command that kind of rent. Get in line with the market, or delay and pray.

  2. I’d wish our city leaders would present a bold vision for Downtown San Francisco beyond just “get back to the office”. The pandemic permanently shifted work patterns globally, and most workers will only go into the office on average 3 times a week. This is an opportunity to reimagine Downtown San Francisco to transform it into a 24/7 neighborhood. Incentivize conversions of Class B/C office spaces to residential to help developers make the math work. Attract more cultural institutions downtown. Create a program for non-profits to rent vacant retail space at no/low cost. Champion and expedite the approval of ALL housing projects. Lift height and density restrictions for residential projects (looking at you 50 Main Street). Just because it will take years for the office market to recover doesn’t mean the city can just sit back and wait for things to happen.

    1. The planning department just made a statement regarding 50 Main and want it to be no more than 400 ft. Surprised it was not reported by Socketsite. A forum that prides itself at being plugged in.

      1. Indeed. Cut the height in half. Hines was counting on the one-of-a-kind views from an 80-story tower and the economies of going very tall which would have resulted in many uber-expensive units. Don’t be surprised if Hines abandons the residential tower – there are better investment opportunities for them in other locales.

      2. Such a short sighted view from the Planning Department. The goal should be to maximize housing on the limited amount of available parcels in Downtown San Francisco. If Hines is willing to go higher to build more units (including more affordable), then we should allow it. The aesthetics of the skyline (which is purely subjective) should be a minor concern.

        1. I agree with the Planning Department. I think a lot of the hard work to make the skyline start with Salesforce Tower as the tallest building and slope down as you go towards the waterfront would be lost if 50 Main was that high. I think 50 Main should be 400′ max.

          1. … because yes, a tabletop of 400′ across the waterfront is so much more appealing than those nasty, undesirable skylines of cities such as Chicago, New York, and Singapore.

          2. What doesn’t make sense is that fact that the 50 Main Street parcel is zoned for 400′ while there are buildings closer to the waterfront like One Market at 564′. If anything, 50 Main Street should be upzoned to somewhere between 650′- 950′ if the city was truly focused on crafting the skyline. As Sierrajeff noted, a 400′ building will just reinforce the tabletop effect.

          3. The planning department should outsource design review and urban planning to a commission of the best architects from the Bay Area instead of UDAT whos ideas and comments often feel like a school project……more articulation, make it industrial looking bla bla bla. If every developer & architect thought they had to present their building to a group who know what they were doing then we would be a lot less Home Depot design and a lot less basic ideas like an ascending skyline that’s cap is already to low.

        1. Last year and a few months ago do not cover the fact they made a comment about the project today about the project. Development projects are always in flux but funny how others have to update this site that prides itself as being “plugged in”.

          1. SocketSite is not a minute-by-minute newsfeed (& thank goodness for that). That Planning “just made a comment” about one building’s height is not a reason for a same-day post.

            If you want a newsfeed, def something to consider when your subscription to SocketSite comes up for renewal.

      3. That’s not what the Planning Dept. said today. In fact they said they support Hines’ vision of the number of units. Planning said they want Hines to envision more width at the base – though how that could happen with the existing historic buildings on Market and Mission Street tower is unclear…

    2. Convert them into housing, then prevent landlords from getting rent or evicting people with endless moratoriums so the haves pay for the livelihoods of have nots and people working the system loopholes as they are doing now. SF has already created a lopsided population density issue which is affecting redistricting. More housing in downtown will worsen downtown congestion problems.

  3. It’s going to be fun watching that [guy] who bought the transamerica pyramid try to turn it into a private club. Talk about a bad read.

  4. Your comment about nonprofits is a good one. For years I was on the board of a theater company, whose HQ is down in a warehouse in Dogpatch. They’d love better and more usable space … and there’s no doubt that a more visible space would in turn generate more publicity and donations.

    I’m consistently stunned that for being one of the wealthiest cities on the planet (per capita), so many arts and charities here struggle for funding and supporters.

    1. Waiting for droppings from sociopathic billionaires perhaps isn’t a sure path to a robust civic culture..

      1. No, most of the city funding for non profits gets hoovered up by an endless list of community outreach and cultural district adjacent non-profits.

  5. “Create a program for non-profits to rent vacant retail space at no/low cost.” So a property owner who can’t rent out their retail space should give it away for free? Seems counterintuitive if they are financially strapped due to all the vacancies.

    1. No no, you missed the key point – or perhaps I should say it was omitted: “Create a program for non-profits to rent vacant retail space at no/low cost to them (the public to pick up the cost)” I mean it really wouldn’t be a “program” if it functioned all on its own…would it?

  6. It’s a simple tab A into slot B problem. Give every homeless person currently living on the streets of San Francisco an empty office. If some of them want to turn cubicle spaces into a tent city, no problem. Let them construct their communities to fit their needs. Plenty of bathrooms on each floor. It’s win-win.

    1. Wrong. Bathroom requirements for office spaces are 1 toilet for up to 80 people. One stall for 40-50 people in an office space would be a *good* design. Toilet fixture requirements for transient housing (shared) are around 1 fixture (1 toilet room) per 10 .

      1. Perhaps ‘Thomas’ was being facetious, as a facilities mismatch is perhaps…oh, maybe 83rd on the list of why this idea wouldn’t work

  7. Ironically as SF office space sits empty the building boom continues in north San Mateo County. Divco just proposed a massive 1.5-million-foot project on the Burlingame shoreline. Aimed at attracting United Airlines to consolidate their BA employees there? Some believe that the 2-million-foot office project at Tanforan may be targeting UA as a prime tenant.

    1. SM county has less than 10% vacancy rate for office. Probably because different approach to quality of life and policing. But also just because SM landlords are more realistic about getting in line with the changing market rent. SF landlords are known have unjustifiably high opinion of their properties, just because of SF address international name recognition. Tanforan is going biotech last I heard, but city of san bruno might require developer to include some multi-family.

      1. The vacancy rate is even lower in the north end of SMC. Much of it is due to bio-tech space which is red hot right now with vacancies around 2% IIRC. You are right about the quality of life being better and in particular the “street scene”.

        The Tanforan project is 2 million feet of office and lab space. A million-foot project on El Camino near the See’s factory will be mostly office space. A million-foot project was just announced in Burlingame w/ 4 mid-rise towers along the Bay. Office space and lab space. Is Unuited Airlines a target tenant? Consolidating its BA operations there?

        Bottom line is that millions of feet of office space is planned for north SMC and it’s a safe bet the developers are targeting SF companies as potential tenants.

        1. General use office space and biotech space are considered different and separate categories of commerical properties. They aren’t interchangeable. Biotech is what some might consider over-specialized space which can’t be used for anything else. That’s apples and oranges. But agreed SF office market has issues.

  8. With Musk taking over Twitter it’s expected the HQ will be moved out of SF. Dumping almost a million feet on the sublease market.

    1. (e)expected by whom ?? If it made sense to keep it here before he bought it , then it makes sense after (and likewise if it didn’t make sense before it doesn’t after either)

      Granted the “rational behavior” model may be called into question here – a lot! – but it’s hardly some given.

      1. This is no secret and especially given Musk’s comments about the HQ building. Last year Twitter shifted some force to Oakland. Taking almost 100K feet in a DTO office tower.

        The Mid-Market business community is very worried about Twitter leaving. Real estate sources quoted in an SFBT article today – about what an exit would do to mid-Market – are not optimistic. Some suggesting Mayor Breed call Musk about the need to keep the SF office. Others think there could be an implosion in the area which already has a more than 30% office vacancy rate. Even before Musk there has been speculation of the need for the HQ given the company’s telework model.

        1. What you keep leaving out of all of your fear-mongering about the Twitter HQ is that Twitter doesn’t own the building, and they are locked into a long-term lease. Since the employees have been working from home, if the HQ closes or is moved out to Austin, it doesn’t really matter all that much, because Musk will still be paying rent to the Shorenstein Properties, the landlord, and the employees who want to continue living in S.F. will be able to do so.

          It doesn’t matter if the office space is unoccupied, because it’s unoccupied now. Shorenstein Properties is still going to collect their rent. Why should any of us care, Dave?

          1. One word: sales tax revenue.
            OK, I guess that’s really three words, so let’s try it again:
            Now if your point was “well there isn’t any now, so it won’t be any worse”, I suppose you could be correct, but I’m not sure permanent resignation to being at the bottom of a pit is something most people accept….so yeah, “caring”.

          2. Also, the payroll tax. As to sales tax I’ve read the average SF worker (presumably 5 days/week) spends over 5K/year.

          3. Probably nobody here has seen twitter’s lease. But twitter might be able to do early termination with some mutually agreed penalty. That would have the effect of dumping another 800k SqFt on the market. Musk probably doesn’t want to be in the sublease business, juggling multiple subtenant leases, in undesirable hard to lease location. Musk has more profitable use of his time being multi-billionaire. Landlord could be stuck with white elephant building that looks impressive but nobody else wants or needs. Musk is going to relocate to austin just to eliminate the CA state income tax when he sells twitter in the future.

          4. @Fact – you’re likely right about the lease. Msuk does not like the building per his comments and can easily eat the cost of a broken lease. As it is he has been offered 100 acres free outside of Austin for a Twitter HQ campus. That would partially offset the loss from the lease though Musk is likely not concerned about money lost on the lease.

            The building is impressive but a white elephant. It is older and may lend itself to residential conversion. Maybe the City can work out a deal with Shorenstein to convert it to low-income housing.

          5. The building is impressive because it was recently remodeled. From a month ago, Elon Musk Throws Spotlight on Homelessness With Twitter Office Idea:

            Feasibility is one thing, likelihood is another. After buying the building in 2011 for $110 million, Shorenstein spent another roughly $300 million to renovate it. The property was later recapitalized with additional owners, according to the San Francisco Business Times. It’s unlikely that the owners would repurpose its space for unhoused tenants considering how much Shorenstein paid to overhaul to building, said Randy Shaw, the executive director of the Tenderloin Housing Clinic.

            Emphasis mine. That paragraph was talking about the possibility, floated by Musk, of converting this building into a homeless shelter. But since he doesn’t own the building, he’s tweeting out the side of his neck, like usual when he pops off about social issues he knows little about. The building isn’t going to be converted into low-income housing, either, and for the same reason: you’d have to get the building’s multiple owners to agree to it, and assuming that will happen is just preposterous given how real estate investors are.

            [Editor’s Note: The Tweet Reincarnation Of 1355 Market Street (circa 2012).]

        2. 100 degrees in Austin today, which will continue for the next few months. As bad as the fires are here, they would be worse in 100 degree heat.

          1. i spent the last week in miami checking it out and looking at homes. its hot and thats probably our biggest concern. but it is much cleaner than SF, the local govt seems to function, no open air drug use, appears much safer. SF has so much natural beauty and perfect weather but the local govt is so broken. I will say that Miami is no longer “cheap”. everything we looked at was around 850-900/sq ft, but the homes were much nicer

          2. The Texas weather has not stopped a slew of companies from relocating to Texas. Articles this week say Twitter ‘s HQ is in play and besides Texas, Florida, Nevada and Ohio are in the mix of potential locations for the HQ,

          3. Unless something unprecedented and semi-miraculous related to a clean energy transition happens in the next ten years, many parts of Miami are literally going to be underwater, most parts of that real estate market are going to be simply uninvestible, and whether or not that city has a local government that conforms to your personal ideology is going to be the least of your concerns.

            Good luck with finding your desired investment property.

          4. Not only will parts of Miami be underwater, but We the People will be paying for their insurance. No private insurance company will cover the risk.

            If the federal government ever stops offering insurance, then Florida real estate will become much, much cheaper!

          5. Perhaps ‘jimbo’ can be interested in a houseboat ! 🙂
            By small coiincidence, one of the CED Final Projects I was looking at yesterday – one of the few that wasn’t a Chinese city (but I guess that’s a separate issue) – was concerned with the area around Chase Center: it had a dashed line labeled “2100 Shoreline”, and lots of shaded area (including said center) that is now terra firma but seems destined by then to be terra aqua.
            There was something of a disconnect b/w the graphic, and the mention of a ~3ft rise – given that most of the land seem to be about 5′ (or more) AMSL – but the point was clear enough: many parts of SF aren’t far behind Miami in the race-to-the-bottom(of the sea).

          6. i wouldnt move to miami beach. we were looking in coral gables area, which i think is out of flood zone. I have to believe that there will be a technological solution to miami flooding. If amsterdam can do it, i think we can. Agree that our taxes will pay, but its too big and important of a city to allow it to just go underwater.

          7. The Netherlands doesn’t get hurricanes. New Orleans would be a better comparison – though New Orleans has better geology and a good fresh water supply. Florida has porous bedrock so the salt water will be coming up from below no matter how many levees they build.

          8. That would be applying old economy logic. In the new WFH economy, office space is a fungible asset. Its like a barrel of oil. It all pretty much does the same thing, and it doesn’t really matter where it comes from. In any case, weather never has been that much of a deal breaker issue for office leasing, or NYC wouldn’t be america’s largest office market. SF landlords need to focus on what things they can control, like adjusting asking rent and properly incentivizing office leasing agents who add all the value to their buildings.

          9. Florida’s problem is the bedrock is porous limestone, which is different than Amsterdam. You can build the biggest dyke in the world, but it won’t matter if the sea water comes up through the rock. This is already happening.

            And just wait until salt water gets into everyone’s septic tank.

          10. “its too big and important of a city to allow it to just go underwater.”

            There’s nothing that can be done. With sea level rise already baked into the next 50 years and built on porous bedrock, the damage is inevitable. The question is who should pay for the inevitable loss of the city. Should it be the American taxpayer? I say no. Just as the American taxpayer should not be liable for the insurance costs of people building their homes in the mountains here for the inevitable wildfires. At least California is raising the insurance premiums for wildfire. Florida’s insurance for hurricanes and flooding should be increased dramatically to cover the costs.

      1. The office vacancy rate in Seattle has increased from 5% to 18% during covid. And Seattle has its own homeless problem.

        The point isn’t to rag on Seattle but to point-out that downtown areas around the country have issues with their office markets, housing affordability, and homelessness. SD’s constant drum beat about the death of San Francisco is really overdone and will make for some funny reading in a few years.

      2. Has anyone taken a stroll anywhere between 5th / 10th street & Mission / Minna streets lately? It has already been imploded and not sure how anyone would feel safe walking into a corporate HQ anywhere in the vicinity of the current Twitter HQ.

  9. If prop C commercial rent tax is going to stand in SF, that’s another 3.5% that landlords have to eat or try to force through to office tenants. Sounds like a small number, unless you’re landlord facing declining office space demand due to WFH. Rasing taxes going into recession is doubling down on stupid. Yet another advantage for neighboring counties like SM.

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