As we outlined earlier this week, the amount of vacant office space in San Francisco now totals nearly 28 million square feet, having increased by 2 million square feet in the fourth quarter of last year. And yes, that’s net of Open AI’s sublet of nearly 500,000 square feet of space in Uber’s Mission Bay HQ development.
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 developed back in 2020 and others have since co-opted as their own, there is now 20.7 Salesforce Towers – or over 1,200 Salesforce Tower floors – worth of empty office space spread across San Francisco, which is roughly enough space to accommodate between 160,000 full-time employees, based on pre-Covid office density ratios, or up to 215,000 part-time or twitter-esque worker bees.
For additional context, that’s roughly 618 times Google’s headline lease of 42,000 square feet of additional office space in the city, which was billed as a bullish sign of a major player “bucking the trend” three years ago, when there was over 50 percent less vacant office space in San Francisco, or over 1,600 times the recently headlined “full floor leases!” at 350 California Street.
At the same time, there are now over 13,000 fewer San Francisco residents with a job than there were are the same time last year, with over 25,000 fewer employed people in San Francisco than there were at the end of 2019, prior to the pandemic, and over 16,000 fewer people in the local labor force.
Suggested reading for those who think San Francisco can mend itself… David Mamet: Why I Am No Longer a ‘Brain-Dead Liberal’ Village Voice March 11, 2008.
I’m with you – we own 6 properties under construction or renting via airbnb. We’re liquidating what we have remaining in SF and going south where the numbers (and laws) are vastly more desirable as an investor. If this continues, we will just leave California. Growth is what’s key, and nothing is providing proof that SF is returning to it’s glory days – just look at the graph, it’s not slowing down.
SF is fundamentally broken when the vast majority of voters are renters looking to reduce everything to the lowest common denominator: actively try to reduce prices by regressing. More crime, less business, less desirable area, less people = lower rents. Of course, a city that is getting more affordable this way is just going to die.
Low rents = low property values. Low property values = low property tax.
SF = bankrupt.
Typical mindset in SF is to dismiss such concerns as doom loop hype from right leaning websites, SF is drifting without any real leadership.
SF Gate not known to be a “right leaning website” reports:
Walgreen announces it is closing another store in San Francisco at 275 Sacramento St. @ Front street.
SF Standard not known as a Right leaning website reports:
Downtown San Francisco Mazarine Coffee located at 720 Market closing permanently.
I don’t know why you keep posting here if you’ve left the Bay Area, but you’re demonstrably wrong. That website was started by and funded in part by a billionaire venture capitalist who worked for the firm Sequoia Capital, and it’s express purpose was to present a pro-development slant on the news in general, and also to support, editorially, the then-recall of the District Attorney who was in office at the time.
They routinely run stories saying that The City makes it “Insanely Hard to Build Housing”, and always leave out the fact that developers with approved and permitted projects take years, and sometimes decades, to break ground.
Brahma (incensed renter),
It breaks my heart to see where San Francisco is today. I spent thousand of hours of my time over 40 years severing on committees to make San Francisco a better place for all.
I raised funds to improve neighborhood parks, waterfront parks, open space. Served on Port committees, Redevelopment committees and neighborhood and homeowners associations. I still care about San Francisco. That’s why I post on Socketsite.
The store closures are the point of my comment. Yet you focus on the source of the information. See my first comment January 21 on this subject above.
Just to follow-up and substantiate what I wrote earlier in this thread…the news website that ‘ExSFLandlord’ mentioned published a story two days ago headlined Despite housing crisis, San Francisco just made it harder to build in some neighborhoods, which had this key revelation buried in the sixth ‘graph: “Another is a plan to demolish a three-story, 116-year-old office building at 1088 Sansome St. and replace it with a 17-story building, which would include 112 new homes. Michael Moritz, who is chairman of The Standard, is an investor in the project.”
It’s a pro-development website and it’s purpose is to present pro-development views as neutral reporting.
And once again, “the overhyped import of the proposal for entitling the future redevelopment of 1088 Sansome is relatively meaningless…[b]ut it is a great time to try to ride the political wave and entitle projects that otherwise might not fly, particularly ones with low cost bases that can be banked,” as we outlined last month.
“the overhyped import of the proposal for entitling the future redevelopment of 1088 Sansome is relatively meaningless…
OBJECTION OVERRULED: The point was raised to show bias on the part of the witness (SF Standard).
That having been said, I would hope it wouldn’t come as a surprise to learn that the traditional media in SF – i.e. the SFNA – also had a pro-development bias, and the alternative media that developed in response to them frequently had an-anti development bias…which is kind of the point of being an alternative to something…right?
Please don’t add to residential supply, Br’er thattechguy. Downward pressure on property prices and rent is bad, just like the nice commerical property agent said! It would be awful if the poors could pay less than half their monthly nut on shelter. We need higher property taxes so that we can fund more gentrifying boondoggles like the Transbay Center, the Chinatown T extension, tax cuts for billionaires, and providing the infrastructure to convert the little remaining PDR land into even more vacant offices and empty condos for a dwindling cohort of callow bitjockeys.
Ever hear the term “don’t bite the hand that feeds?”
Good ol’ trickle down! Wealth doesn’t trickle down from the wealthy to the poors; it’s vacuumed up by the wealthy from the workers who actually create it. Look at any chart showing the change in the distribution of the gains to productivity over time (linked from my handle, if the editor will permit). Trickle down is the mother of all economic hoaxes. It’s widely discredited, and even many adherents to orthodox economic theory have distanced themselves from this nonsense. Wealth isn’t created by billionaire speculators throwing money at the wall to see what sticks, with tiny amounts dropping onto the populace like manna; it’s created by people who do actual labor, whether physical, intellectual, or a combination of both.
“…gentrifying boondoggles like the Transbay Center…”
That seems like a curious accusation: it order for something to be gentrifying, doesn’t it have to …well actually do something?? But the very reason it’s a “boondoggle” is b/c it’s basically unused. (OTOH, if the delusional fantasy of [highly subsidized] HSR had actually materialized, then it might have served a a catalyst for gentrification; but it wouldn’t be a ‘boondoggle’…well, not as much of one, anyway. Right now it’s on track – no pun intended – for being one of the greatest wastes of time and money in history)
Those high-ticket taxpayer-funded projects for the most part repurposed PDR land into offices, condos, upscale apartments, and associated infrastructure, bringing high-income, free-spending kids into the core, which displaced housing and jobsites for lower income workers and chased out street-level retail and services catering to those low-income cohorts. The displacement of the poors was successful; the long-term viability of young, rich symbol manipulators tossing dollars into the air on downtown streets remains to be seen. They are “boondoggles” in that they were all very expensive yet utterly unnecessary projects.
The implicit point of my rant was that if we stopped kissing rich people’s posteriors, we wouldn’t need to depend on their contributions to the local tax base in order to fund their large, expensive, unnecessary projects (aka “boondoggles”). The wealthy (as played here by thattechguy) are trying to hold us hostage by threatening to go Galt. Look at the chart of the change in the distribution of the gains to productivity over the years. The welathy are parasites on the rest of society, on the people who create the real wealth. “Don’t go Galt, Br’er Techlord!”
That is quite some gall to quote that in this day and age… others say ‘eat the rich’, some of them surely deeply motivated by actual hunger.
The two largest employers in SF by an order of magnitude are: SF County Gov and UCSF.
Those people are necessary for day to day city functioning, yet no moves have been made to make housing, education, and daily life etc palatable or better yet edging out the competition. Deficits in police, teachers, doctors and nurses already well documented… consistent with a wealthy playground but not any normally functioning city.
Cue up the (tiny) violin music.
S.F. simply has too many flippers, two bit landlords, and other hangers-on who have arrived here from elsewhere to make their fortune in the S.F. real estate “game” by exploiting those who are forced by their employment situation to overpay for housing. S.F.’s housing market, writ large, has been overheated since prior to the pandemic, and now is the time for the price level to come down a bit. And while there’s no denying there has been some impact on prices residents are willing to pay from crime, it pales in comparison to the impact of WFH opportunities.
If you lose money when you sell (because your 1031 exchange didn’t work out for whatever reason) that will make a positive contribution to CPI reduction.
I think there’s a lot wrong with your analysis, but I’m curious about one thing. Do you see your role of having replaced residents with tourists in six units as having much to do with the alleged regression and lack of interest on the part of the public?
Yay! the tower graphic is back!
And use – of the concept, if not the graphic – seems to be spreading. I wonder if SSiters will be asked to testify in an intellectual property theft lawsuit?
In Manhattan it would be the Chrysler Building. The office vacancy rate in Manhattan is about 22% – the equivalent of 40 Chrysler Buildings sitting empty. The highest office vacancy rate since the mid 80’s and considered catastrophic for the market there. LA’s was 30 % last summer but is now hovering around 24%. Same in Chicago. This is not just a local problem. The average US vacancy rate is in the low 20%’s.
SF office vacancy rate was in 5% range pre-pandemic. Now pushing 40% range (from other sources not used here). You are whistling past the graveyard.
It was fairly low in the other cities I mentioned, also pre pandemic. No matter what the actual percentage it is not just a local problem (which was my point).
not just a local problem, but its way more pronounced in SF and some of the other markets are rebounding while our commercial market continues to get worse
Maybe, just perhaps, San Francisco CRE developers overbuilt open plan office space compared to those other cities.
Or maybe, just perhaps, SF city government mismanaged the last few years of public safety, which has slowed our recovery from Covid, more than those other cities.