A ghost town.
That's how many have begun referring to San Francisco's downtown and Financial districts as the number of vacant retail spaces and office buildings seem to climb daily.
Normally, as supply goes up, rental prices go down. But so far that is not happening in the city.
The Salesforce East building is in recent headlines after its onetime sole tenant will be leaving. Salesforce is giving up 104,000 square feet of space, adding to an already record-breaking availability of office space in San Francisco.
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"The vacancy rate in San Francisco is about 30% or about 35 million square feet that is not currently being used," said Colin Yasukochi with commercial real estate firm CBRE. "And that's the highest that we've ever seen in San Francisco."
Yasukochi, who serves as CBRE's executive director of the tech insight center, said office vacancy rates in large cities across the country are all being affected by the move to remote work.
But San Francisco is getting hit harder because it has a high concentration of software firms that can easily keep having workers work remotely.
Alexander Quinn, director of research with Jones Lang LaSalle Commercial Real Estate, said the city is almost getting hit because it had been a hub for commuters.
"Those that are less comfortable going on transit, which has definitely been the case during the pandemic," Quinn said. "They've been most slow to come back to the office."
While a few landlords have been slightly lowering prices, most in the newer, taller towers have not. In fact, some buildings with the best view are actually raising their leasing prices because of high demand from companies that are being picky about where they will keep their remaining office spaces.
"They want to be at the top of these tall buildings, and they want to be in the buildings along the waterfront with beautiful views because they're trying to get their employees to come back to the office," Yasukochi said.
Landlords in shorter, or slightly older properties, are also not cutting prices and instead are offering months of free rent or money to customize their office space for new tenants. That's because many properties still have some buildings debt that is still being paid off.
"They can't materially retreat on rent without risk of defaulting on their building," Quinn said.
According to Quinn, dropping rents could also affect the value of the building and office space in the city in general. With work from home continuing and a downtown in the tech industry overall. Quinn said there is a real possibility some commercial buildings in the city could go into default.
