As employees gradually fill offices in Los Angeles, New York and Austin, San Francisco is keeping it virtual.
Less than 20 percent of office workers had returned by the end of January, the San Francisco Business Times reported, citing San Francisco Chief Economist Ted Egan.
That’s below other major cities, where 25 percent to 45 percent of office workers had trickled back to the office.
San Francisco’s vacancy rate stood at 22.4 percent in the fourth quarter, the highest in about 20 years and 4.6 percent higher than before the pandemic.
“We are still essentially in the place we were a year ago,” Egan said.
Some companies are still releasing office space rather than leasing new space: Merrill Lynch and Slack are giving up a combined 300,000 square feet. While rents have dropped 10 to 15 percent since the pandemic, Egan said many have maintained prices around pre-pandemic levels.
“If you are a building owner, it’s not clear that now would be the right time to cut your rents,” said Egan. “When everyone is back from Covid and is deciding what their needs are, then there will be more demand and more of an interest in capturing that demand.”
Egan said employment growth has increased and venture capital has kept funding companies throughout the pandemic, signs of future office demand.
Some companies are expanding. Sephora, for example, recently leased 286,000 square feet, the biggest office lease during the pandemic.
Others remain skeptical.
Slack CEO Stewart Butterfield told the Washington Post in December that company efforts to compel employees back to the office was a “doomed approach.”
“Work is no longer a place you go. It’s something you do,” he said.
Read more
Commercial
San Francisco
Sephora takes 286K sf in SF, city’s biggest Covid-era office lease
Construction
San Francisco
IKEA begins construction on long-empty Market Street mall property
[SFBT] — Gabriel Poblete