A new CBRE report shows San Francisco’s office vacancy rate has hit an unprecedented 37% in the second quarter of 2024 — worsening economic strains already present in the city’s post-pandemic economy.
Prior to the pandemic, San Francisco was renowned for its highly occupied office spaces, boasting near 100% occupancy, as reported by the California Globe.
The onset of COVID-19 pandemic, however, rapidly transformed the city’s economy. Facing financial uncertainty, many of the city’s companies broke leases or adopted a permanent work-from-home model. The scenario worsened with substantial tech industry layoffs starting in 2022, a combination of factors that left large office spaces unoccupied.
Even as the city began to recover from the initial pandemic shock, it’s reported that other factors such as high crime rates and an influx of expiring leases from non-returning companies continued to drive up vacancy rates.
By December 2023, the city had an office vacancy rate of 35.9%. Temporary relief arrived from the AI sector, with companies like OpenAI acquiring significant office space. However, it was not enough to turn the trend around.
Axios reports that CBRE experts, like Colin Yasukochi, expect to see the high vacancy rate come down by the end of the year or into 2025.
However, experts remain highly skeptical of a pre-pandemic level recovery. The New York Post reports that at least 53 companies have relocated their headquarters out of San Francisco and the Bay area since 2020.
