Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Health https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ The SF office’s vacancy hits an all-time high, surpassing the dot-com bust

The SF office’s vacancy hits an all-time high, surpassing the dot-com bust

San Francisco office rental prices have fallen steadily over the past year, hitting a monumental low in the first quarter of 2021.

Prices fell 14.8% in the last quarter, making it the first time in five years that Manhattan’s office rental market is more expensive than San Francisco’s, as first reported by the San Francisco Chronicle. (SFGATE and the San Francisco Chronicle are both owned by Hearst, but operate independently.)

SF offices rented an average of $ 75.32 per square foot in the first three months of the year compared to Manhattan’s $ 75.99 per square foot, according to data from brokerage firm CBRE.

In early 2020, unemployment in the office fluctuated around 4%, but has since more than quadrupled to 19.7% by the end of March 2021, according to CBRE. Manhattan’s vacancy rate hit 12.5% ​​in the first quarter of the year.

This makes a total of 16.3 million square meters vacant in the city, where more than half of the available space is sublet. Typically, there is about 1 million square feet of subletting space in the San Francisco market at any given time, but when the pandemic pulls on, companies stuck in leases try to recover some of their losses. With an additional 1.5 million square feet of subletting space added in Q1, there are now a total of 9.5 million square feet on the market. Sublease accounts for 45% of all vacant office space.

“It is too early to know whether office rent has fallen. San Francisco’s overall rental office rent fell 1.5 percent in the first quarter of 2021, and optimism abounds with widespread vaccines in April and the potential for lifting restrictions in June if the state were to meet certain targets, “said Lexi Russell, director of research and analysis at CBRE. “However, with almost 26% of office space being marketed as vacant, there are still obstacles to jump through before rental growth really returns.”

SF’s vacancy in the first quarter also surpassed the previous record high of 19.1% at the top of the dot-com era bust. The city also lost its title as the leading market for “huge technical leases” for the first time ever and dropped from No. 1 to No. 6 in CBRE’s ranking.

Even with the vaccine effort begun, offices are just starting to slow down again in San Francisco, and some of them are opening with much smaller office footprints. In March, Salesforce, the city’s largest private employer, canceled its 325,000-square-foot lease in the undeveloped Parcel F tower in San Francisco’s Transbay district after the company announced in February that more than half of the workforce would continue to work remotely. or on a flexible schedule after the pandemic is over. It also rents out part of its offices at 350 Mission St.

Other companies that have recently listed office space include Yelp, which has its 161,876-square-foot office space at 140 New Montgomery St., which can be rented in October 2021. WeWork is closing five locations downtown, and Old Navy also announced in February that they would close down its Mission Bay offices and move into the parent company Gap Inc.’s area of ​​operation.

When Twitter built 104,850 square feet of its 1st 10th St. building for rent in September 2020, it was one of the first when the social media giant announced early in the pandemic that a permanent opportunity to work from home for its employees would be vacant.

Perhaps the most famous example of technology companies scaling back is when Pinterest paid $ 89.5 million to terminate its lease for 88 Bluxome, a high-rise to be built near the company’s existing headquarters in San Francisco.

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