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Home / Health / San Francisco office vacancy rate hits a record high, surpassing the burst of the Internet bubble

San Francisco office vacancy rate hits a record high, surpassing the burst of the Internet bubble



San Francisco office rental prices have steadily declined over the past year and hit a record low in the first quarter of 2021.

According to the first report of the San Francisco Chronicle, prices fell by 14.8% last quarter. This is the first time in five years that the office rental market in Manhattan has seen higher prices than San Francisco. (SFGATE and the San Francisco Chronicle are both owned by Hirst, but operate independently of each other.)

According to data from the brokerage firm CBRE, the average rent in the San Francisco office was US$75.32 per square foot in the first three months of this year, while the rent in Manhattan was US$75.99 per square foot.


According to data from CB Richard Ellis, the office vacancy rate was hovering around 4% at the beginning of 2020, but has since more than quadrupled to 19.7% at the end of March 2021. The vacancy rate in Manhattan reached 12.5% ​​in the first quarter of this year.

As a result, the city has a total of 16.3 million square feet of vacant space, of which more than half of the vacant sublet area. Usually, at any given time, there will be about 1 million square feet of sublease space in the San Francisco market, but as the pandemic intensifies, companies that fall into lease status are trying to make up for some of the losses. 1.5 million square feet of sublease space was added in the first quarter, and there are now a total of 9.5 million square feet on the market. Subletting accounts for 45% of all available office space.

“It’s too early to know whether office rents have bottomed out. CBRE Research and Analysis Director Lexi Russell said that direct direct office rents in San Francisco fell by 1.5% in the first quarter of 2021, with widespread use of vaccines in April and 6 Optimism that restrictions may be lifted after the state achieves certain goals in May is everywhere. “However, with nearly 26% of office space being marketed, there are still many obstacles to overcome before rent growth really picks up. . “

At the peak of the dot-com bubble burst, SF’s vacancy rate in the first quarter also exceeded the previous record high of 19.1%. The city also lost its title as a leading market for “large technology leasing” for the first time, falling from first to sixth in CBRE’s ranking.

Even with increased efforts on vaccines, offices in San Francisco have only begun to slowly reopen, and the office space of some of them will be greatly reduced. In March, Salesforce, the city’s largest private employer, cancelled the lease contract for 325,000 square feet in the unbuilt Parcel F tower in San Francisco’s Transbay neighborhood, after the company announced in February that more than half of the company’s employees would continue to work remotely or in office. Location work. The timetable after the pandemic is over is flexible. It also subletted part of the office at 350 Mission Street.

Other companies that recently listed office space include Yelp, which leased 161,876 square feet of office space at 140 New Montgomery Street in October 2021. WeWork will close five downtown office locations, and Old Navy announced in February that it will close. It is in the Mission Bay office and moved to the work area of ​​the parent company Gap Inc.

When Twitter listed its 104,850 square feet in Building 1 on 10th Street for subletting in September 2020, this was the first social media giant to announce in the early stages of the pandemic that it would provide its employees with the option of permanent work from home. one. usable.

Perhaps the most famous example of a technology company’s downsizing is that Pinterest paid $89.5 million to terminate its 88 Bluxome, a high-rise complex built near the company’s existing San Francisco headquarters.


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