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The hits just keep coming for the city of San Francisco.
The city now has more vacant office space than it has ever had before in history. Almost 40 percent of office spaces in the city are empty. That represents a massive loss in tax revenue for the city.
It’s very easy to see how the city got to this place. Businesses have fled the city and the state of California, due to high taxes, rising crime, and a homeless problem that is completely out of control.
The San Francisco Chronicle reports:
San Francisco’s amount of vacant office space has reached the highest level ever recorded in the city’s history.
According to preliminary fourth quarter data provided by real estate brokerage CBRE, the city’s vacancy rate ticked up nearly 2 percentage points from the previous quarter, reaching 35.9% at year-end. In September, that number was at 33.9%, the previous record high.
The increase was driven by several large subleases placed on the market in recent months, as well as direct spaces given back by office tenants, resulting in 1.4 million square feet of negative net absorption, or occupancy loss. For 2023, the city had a total occupancy loss of 6.7 million square feet, which is the second highest total since 2020, when the city recorded 9.9 million square feet of negative net absorption.
While alarming, the flood of office space hitting the market was somewhat anticipated. For example, Block, the fintech formerly known as Square, announced last year that it would not renew its 470,000-square-foot lease at 1455 Market St. in San Francisco’s Mid-Market neighborhood, which expired in September.
John Sexton of Hot Air adds this:
The bottom line is that the urban doom loom in San Francisco is resting on a knife’s edge at the moment. The city and state are trying to hold it back by propping up public transportation because that really could be the last straw for downtown, but it’s not clear if the money will hold out long enough for the ridership to recover. That’s really another way of saying it’s not clear how long it will take for downtown to recover. And what would recovery even look like at this point? I’m not sure anyone knows.
The city could stop this trend in its tracks if they were willing to enforce the law and clean up their streets, but they have shown repeatedly that they care more about the rights of people living in the streets.
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