Office space vacancies soar in post-pandemic San Francisco; 'It's not a good look'
SAN FRANCISCO -- Take a walk through downtown San Francisco, and it's tough to miss the numerous "for lease" signs and vacant spaces.
Currently, there is a record amount of empty office space in San Francisco at nearly 30%, according to figures from CBRE.
"Pre-pandemic, our vacancy rate was around 4%. Now we're right around 30%," said Colin Yasukochi, the executive director of CBRE's Tech Insight Center. "The biggest reason for that is going to be hybrid work, and most recently, layoffs. Right now, we have about 25 million square feet of vacant office space in the city."
Robbie Silver, the executive director of the Downtown San Francisco Partnership, acknowledges the empty space is problematic as the city looks to reinvent the downtown area.
"Seeing multiple blocks with multiple vacancies – it's not a good look," Silver said. "150,000 square feet of ground floor vacancies in our downtown district alone."
However, Silver sees this as a unique opportunity.
"If we give people positive reasons to come downtown, they're going to come," he said. "I truly believe that as one door closes, another door opens. The amount of vacancies we're seeing on the ground floor now in downtown are going to get better over the next couple of years. It's going to take time. It's going to take creativity, and it's going to take community collaboration to make it happen."
He'd like to see more of a diversified downtown, with less of a reliance on tech and finance.
"When we've relied on one industry to carry the tax roll, and that industry is now working from home or only coming in two days a week – it doesn't make for a very resilient downtown from an economic perspective," Silver said. "What we need is more mixed-use downtown."
Silver says bigger picture, the city tackling a widely-talked about San Francisco problem also plays a role in the equation.
"Open drug dealing has to be the first thing that we need to tackle. But also, in contrast, my area -- the downtown Financial District -- we don't have a lot of that," he said.
In terms of the vacant space, Yasukochi says there isn't much demand right now. However, he believes change is coming.
"It's going to take some time for the office market to start to turn around, but we're very encouraged that, that hopefully should start to happen either towards the end of this year or into early next year, as the economy starts to improve, interest rates start to come down, and growth can really turn around," Yasukochi said.