It’s official: San Francisco’s office vacancy rate just set a record.
The office-vacancy rate in and around downtown San Francisco continued to creep upward to a new record high in the fourth quarter of 2023, according to a report from CBRE.
The increase, though expected, came despite the highest level of leasing activity since the second quarter of 2022 and pushed The City’s core business areas into new territory as the vacancy rate hit 35.6%, up 1.6 percentage points from the prior quarter, the commercial real-estate firm reported.
Meanwhile, the number of office-using workers was down slightly from the previous quarter to 345,200 from 346,500.
“Looking ahead, the vacancy rate will continue to inch upward but will likely peak in late 2024,” CBRE’s researchers predicted.
San Francisco has been particularly hard-hit, but it is not alone, with cities across the country also harboring expanses of empty office space as employers have shed space and workers have not returned to offices in the same numbers as before the COVID-19 pandemic because of the rise of remote work.
Moody’s Analytics issued a statement Monday saying much of commercial real estate was “stuck in limbo” despite positive signs in the broader economy, and the national office vacancy rate had risen to a record-breaking 19.6%, higher than the 19.3% peaks hit in 1986 and 1991.
San Francisco’s glut of office space is leading building owners to lower rents, with the average asking rate for directly leased space dropping 3.4% in the quarter and 8.7% for the year. That brought the decrease in average asking rate to 21.6% from its peak in early 2020.
City Hall Unveils Latest Plans to Redevelop Candlestick Point, 11 Years After 49ers Left.
More than a decade after the 49ers left Candlestick Park, the city has unveiled new plans for Candlestick Point, with 7,200 new homes, but it seems questionable whether there will be much call for all of the office space in this plan.
Your San Francisco 49ers played their last game at Candlestick Park on December 23, 2013. Eight months later, the last event that ever happened there was a Paul McCartney concert where he played “Live and Let Die.” But San Francisco lived and let Candlestick Point die, despite a grand 2016 plan for a retail, performance, and residential project that never got off the ground.
“Right now what we have in the absence of Candlestick stadium, which has been torn down for years, is a big gaping hole in the middle of a community,” the district’s supervisor Shamann Walton said at a Tuesday Board of Supervisors meeting. “It is nothing but a pile of dirt. That has allowed for increased encampments and other nuisances to continue to plague the area.”
The board was talking Candlestick, because they were considering new redevelopment plans for Candlestick Point, as KPIX reports. As seen above, the plan is intertwined with the highly beleaguered and possibly contaminated Hunters Point Shipyard redevelopment project, moving as two plans with one master developer. But the Shipyard is project is delayed by some sticky legal problems over faked soil samples.
So that means the Candlestick Point project is likely moving forward first.
But given San Francisco’s dire housing shortage, and glut of unwanted office space, do we really need that two million square feet of office and R&D? We already got more than we can handle! Regardless, OCII staff said there would also be “entertainment uses” in there, but did not elaborate on what those would be.
h/t Marielle Redclaw