The flight of tech companies from San Francisco has resulted in record office vacancies of around 32 per cent. Photograph: Jim Wilson/New York TimesWhen Uber was booming a decade ago, it decided to send a signal of its commitment to San Francisco with a mammoth glass-walled campus on the city’s eastern waterfront.
The exodus has continued in to this year. Google abandoned one of its offices in downtown’s Spear Tower last month, while Salesforce, the city’s largest private employer and occupier of its tallest skyscraper, has reduced its space by 45 per cent and said it will continue office reductions in 2024.Connacht’s female entrepreneurs: ‘Making a living from clothing in Ireland is not easy’Others have taken more extreme measures.
According to CBRE, the 20 largest tech companies in San Francisco occupied 16 million sq ft of office space in 2019; by the end of last year that had halved to 8.3 million sq ft. Research by rival realtor group JLL said effective rents are now 30 per cent below 2019 levels, at $71 per sq ft. The amount of office space available for sublet hit a record nine million sq ft late last year, JLL said, although this has since dropped to about eight million.
JLL says it has completed 14 leases for AI firms in San Francisco in the first quarter of this year alone, but most were fledgling companies opening their first offices funded by seed capital – and the majority of these start-ups will fail.