San Francisco Commercial Real Estate Vacancies at 27.2% After 12 Quarters of Continuous Increase
Per CNBC
San Francisco commercial real estate vacancies are hitting a record high as more and more commercial buildings are left empty. Commercial real estate vacancies have reached 27.2% as less commercial space is being rented.
The data was gathered by CBRE research, an American commercial real estate firm, showing the increase in vacancies from Q4 of 2019 to Q4 of 2022. The data showed how the largest leap occurred from Q4 of 2019 to Q4 of 2020 when the pandemic happened.
Here are the reported San Francisco commercial real estate vacancies starting Q4 2019:
- Q4 2019 - 3.7%
- Q4 2020 - 16.9% (an increase of 13.2% YOY)
- Q4 2021 - 22.6% (an increase of 5.7% YOY)
- Q4 2022 - 27.2% (an increase of 4.6% YOY)
San Francisco commercial real estate vacancies shot up from 3.7% in Q4 of 2019 to 27.2% in Q4 of 2022, an increase of 23.5%. This means that despite the economy slowly recovering from the pandemic and other factors, over a quarter of commercial real estate space in SF remains vacant.
Per the report, one major reason for the vacancies is San Francisco's close relations to tech. Both increasing rates and the brutal macroeconomic environment were cited as reasons tech companies cut their workforce dramatically.
Subleases, however, increased by 8% quarter-over-quarter, meaning that the businesses aren't leaving but rather downsizing. It was also reported that big tech companies still had more employees now compared to pre-pandemic levels despite massive layoffs.
This comes when US banks are getting ready for a recession, as even Morgan Stanley analysts say that banks will incorporate a "more severe economic outlook." Aside from tech, banks like Goldman Sachs, Morgan Stanley, Citigroup, and others have started reducing their workforce.
With widespread news of layoffs, Microsoft announced that their employees would get unlimited time off without needing to accrue vacation time. The time off includes ten corporate holidays, leaves of absence, mental health time off, and sick leaves.
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