According to Bloomberg, which cites recent statistics from real estate firm CBRE Group Inc., the office vacancy rate in San Francisco reached a record high of 25.5% at the end of September, which is an increase from the rate of 20% a year earlier. The number of empty office spaces has reached levels not seen since the end of the Great Recession in 2008 and the bursting of the dot-com bubble.
According to CBRE, the percentage of vacant office space in the city was approximately 4% when the virus epidemic first started. At the time, the rate was 20% in September of 2021, but it has subsequently raised to 25.5%.
According to the findings of a security firm called Kastle Systems, workers have been slow to return to the city's core, with weekly office use at less than 40% of the average that existed before the pandemic. According to MSCI Real Assets, office values in the San Francisco metropolitan area have dropped by roughly forty percent from their peak in December 2020 when measured on a price-per-square-foot basis.
According to the statistics, this phenomena is being driven by a number of factors, including the rise of remote work and the increasing popularity of technology companies relocating their operations outside of San Francisco or even to other states.
Tech companies have been leaving the Bay Area for cities with lower taxes, cheaper housing, better public schools, and lower crime rates.
It is difficult for a technology company to recruit new talent to an area where the cost of living is significantly higher than in the rest of the United States and when portions of the city have the appearance of a third-world country. Some neighborhoods and street corners in the Bay Area are filled with homeless people and addicts of fentanyl.
Then there is the market instability that was caused by the Federal Reserve, which prompted both large and small technology companies to immediately cut costs by reducing the size of their personnel and the amount of office space they occupied.
Tech firms such as Google, Amazon, and Facebook's parent company Meta have all implemented hiring limits in recent months.
The preceding is a summary of an article that originally appeared on Headline Wealth.