- San Francisco should be a cautionary tale for cities that rely on tech companies to fill offices.
- The city had an office vacancy rate of about 19% in November, according to Commercial Edge.
- At least nine companies have left office space in the city, .
San Francisco’s tech exodus should be a wake-up call to other cities that rely on tech companies to fill downtown offices.
San Francisco’s once-bustling downtown has turned into a ghost town as businesses have left their offices. The city’s office vacancy rate increased by more than 4 percentage points from November 2021 to November 2022, to around 19%, according to the Trade Observer.
The exodus is also a double-edged sword that threatens San Francisco’s financial health. A New York Times report published this month pointed out that local businesses like Mixt, a health food restaurant, have struggled to sustain business because high-income workers no longer flock downtown for their morning coffee or their lunch salad.
Mayor of London race estimated that declining commercial property values could contribute to a budget variance of $728 million over the next two fiscal years, Bloomberg reported.
Salesforce CEO Marc Benioff told Bloomberg that San Francisco needs “more diversity” in its economic and tax base, as well as more downtown residences and cultural attractions.
Meanwhile, layoffs have piled up at companies like Adobe, which allegedly laid off 100 employees of its marketing department early December, and Airtable, which told TechCrunch on December 8 that it had cut 20% of its workforce. That suggests San Francisco’s struggles with vacancies are far from over.
“The challenge in all of this is that we’re sort of rebuilding something that doesn’t necessarily exist,” Jeff Bellisario, executive director of the Bay Area Council Economic Institute, told Bloomberg. “What does the new San Francisco look like? And I’m not sure we’ve got it all figured out yet.”
Here’s a roundup of major office moves in San Francisco from 2022 that indicate just how serious the situation is:
Snap Inc. laid off hundreds of employees.
Richard Drew/Associated Press
Break: Snap Inc., the company that owns Snapchat, terminated the lease of its 33,000 square foot office in October. The company is going through a restructuring, which has resulted in the layoff of more than 1,200 employees.
Twitter: People close to Twitter told The Times this month that Twitter had stopped paying rent for its headquarters at 1355 Market St. as the company, now run by Elon Musk, seeks to cut costs to improve profitability. The newspaper also reported in late November that Twitter’s staff has shrunk from about 7,500 full-time employees to less than 3,700 since Musk took over in late October.
Meta plans to leave part of its offices in San Francisco.
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Meta: The Silicon Valley Business Journal reported in early December that Meta, Facebook’s parent company, planned to part ways with its more than 430,000 square foot office space at 181 Fremont St. despite having eight years remaining on its lease. Meta leases over 1.2 million square feet of office space in the San Francisco Bay Area, and CEO Mark Zuckerberg told investors during his third quarter earnings call that it plans to spend up to $3 billion over the next two years to reduce its total office footprint by buying out leases.
To block: The San Francisco Chronicle reported in June that Block, the payment processing company owned by Jack Dorsey, the former CEO of Twitter, had no plans to renew its lease at the end of the year for a 470,000 square foot office in the Mid- Market as society embraced working from home.
Selling power : The San Francisco Business Times reported in July that software giant Salesforce was making more than 412,000 square feet of office space available in its headquarters for sublease as the company adopted a strategy it called “Success from anywhere. Careers everywhere.“
Airbnb: In September, the short-term rental giant offered to sublet more than 150,000 square feet of office space in its three-story building in San Francisco’s SoMa neighborhood, the San Francisco Business Times reported. The company also has sublet over 300,000 square feet of office space close to Santa Clara, another Bay Area office hub.
Lyft: The San Francisco Business Times reported in August that ride-sharing company Lyft plans to divest 250,000 square feet of office space at its Berry Street headquarters over the next year, cutting the company’s total leased space in the city by more than half .
PayPal left its San Francisco office this summer.
Artur Widak/NurPhoto via Getty Images
PayPal: Local news outlet ABC7 reported in April that digital payments processor PayPal planned to close its Market Street office on June 3, leaving PayPal without a footprint in the city.
Soft: Slack, a corporate communications company, sublet more than 200,000 square feet of office space at 45 Fremont St. in February as it moved toward a digital work environment, the San Francisco Business Times reported. The report says the company still holds a lease at 500 Howard St., near Salesforce headquarters.
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