Is San Francisco’s CRE Market on the Verge of Collapse?
MyEListing.com, a Texas-based commercial real estate marketplace, has published a report based on San Francisco data, and it paints a picture of a seriously struggling office market. The pandemic-driven “work-from-home” model appears to be taking permanent hold in The City by the Bay.
According to the report, net absorption was negative 1.5 million square feet in the first quarter of 2022, with Class-A buildings within the North and South Financial Districts and SOMA East being hit the hardest. Landlords of some of those buildings are filing applications for their property values to be reduced in an effort to lessen tax bills. Some properties have been abandoned, and are now nicknamed “Zombie Buildings”.
With San Francisco’s high percentage of tech companies, employees can easily work from home, and employers are seeing benefits. Workers, on average, are 47% more productive with fewer distractions while working remotely, and investors also worry that companies are embracing the trend to save money on office rents.
To be sure, not all investors are pessimistic as there has been robust touring tenant activity in commercial real estate (CRE) buildings and solid venture capital funding numbers, but with San Francisco ranking dead last in a recent survey of 60 U.S. cities’ downtown recovery, there is increasing concern that commercial real estate in The City is on the verge of collapse.
Mark comes to ConnectCRE with an extensive background as a business and news reporter in San Francisco radio, as well as 35 years as a traffic reporter on several stations including KGO, KNBR, KCBS and KFRC. As a business reporter, Mark covered the tech world in Silicon Valley where he became familiar with real estate transactions in the hot Bay Area marketplace. He attended San Jose State University with a BA in Radio and TV Broadcasting and currently resides in the Lake Tahoe area where he gets to frequently enjoy all of his favorite activities: Golfing, Fishing, Hiking and Skiing.
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