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17.1 Salesforce Towers worth of empty office space spread across SF

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Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#41

Post by zuminator »

tssva wrote: post #13
passwordoops wrote: post #2

I wonder how this compares to other cities globally

According to the chart in this article from April SF had the highest available office space of US major cities but no by a large margin. https://www.axios.com/local/washington-dc/2023/04/24/office-... 22.9% of SF office space was available. Houston 22.2%, Dallas 20.9%, Chicago 19.6% and DC 19.2%.

I reckon SF was hit particularly hard because it has a heavy concentration in tech compared with other large US cities, and tech workers have most avidly embraced wfh?

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#42

Post by jjtheblunt »

gochi wrote: post #40

What I don't understand is why we're still stuck with this idea that entire buildings need to be dedicated to one thing and one thing only. "Hybrid" spaces are still so rare and they wind up being not all that hybrid, more like 2 giant sections one for retail and one for office.

Chicago and New York are at least full of buildings with multiple purposes, and have been for at least 50 years.

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#43

Post by tssva »

Zigurd wrote: post #29
tssva wrote: post #13

Earlier quoted context omitted.

According to the chart in this article from April SF had the highest available office space of US major cities but no by a large margin. https://www.axios.com/local/washington-dc/2023/04/24/office-... 22.9% of SF office space was available. Houston 22.2%, Dallas 20.9%, Chicago 19.6% and DC 19.2%.

I wonder how fudged are those numbers. I know of a town with tons of idle hotel space yet they report an occupancy rate of 65%, which is within a few percent of the typical range of 70%-90%. I suspect some empty properties are listed as "under renovation" even though no work is being done.

If they are fudged, they are likely to be fudged across all markets.

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#44

Post by 8f2ab37a-ed6c »

legitster wrote: post #23

US cities are going to be in a world of hurt here pretty soon. Cities exist as job markets. And the primary force that keeps urban areas safe and friendly is the shoeleather of middle class workers coming in and out of work each day. The vacuum left has been filled with homelessness and poverty. These people were always here, but there was enough critical mass that they were at the margins. Now they are at all of the…

How cyclical is this? Say there is a middle-class-flight for the next few decades to the Peninsula or Marin, SF deflates for many years, then eventually artists start moving in for the cheap rent and abundant space, and the cycle starts all over again, the $10 cold brews return. I think this was somewhat the case with Downtown Los Angeles.

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#45

Post by Mountain_Skies »

One interesting job market change I've seen in the past two months has been the return of the private office. After a couple of decades of moving everyone they could into bullpens and other open areas, it appears that some managers see private offices, while not as good as open floorplans, better than having their workers at home completely out of view. Longterm leases and reduced headcount physically in the office makes these private offices, with floor to ceiling walls and doors that close, viable, at least for now. It's still only a single digit percentage of job postings mentioning private offices and it'll be interesting to see if the trend of offering them grows.

It's an new type of carrot, but I doubt it is going to work on very many. Open floorplans were an abomination but the gap between them and a private office is much smaller than the gap between a private office and a home office. For those who don't have a good workspace at home or just prefer to be in the office, private offices might be a nice change. There probably will be a small percentage of extreme extraverts who miss the bullpen type workspace.

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#46

Post by legitster »

pessimizer wrote: post #27
legitster wrote: post #24

Earlier quoted context omitted.

They could cut rent drastically and people still might not show up. Also, if the owners start going bad on their debts there is a potentially cascading financial problem for the city of San Francisco

> They could cut rent drastically and people still might not show up. You could sell ice cream for 5 cents on a hot summer day and people might not buy it. Try it and find out; there has been speculation in the past that lowering prices raises sales.

Sure. But if you took out a huge mortgage to buy your ice cream business based on anticipated sales, there are certain prices you cannot go below without going bankrupt.

In a way, this is worse with real estate. With ice cream you can always make up losses with volume (to a certain extent). With real estate you have a fixed supply.

Moreover, if you drop the price to get a new tenant, you implicitly drop the price for all existing units as well.

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#47

Post by [deleted] »

orangepurple wrote: post #34
legitster wrote: post #23

US cities are going to be in a world of hurt here pretty soon. Cities exist as job markets. And the primary force that keeps urban areas safe and friendly is the shoeleather of middle class workers coming in and out of work each day. The vacuum left has been filled with homelessness and poverty. These people were always here, but there was enough critical mass that they were at the margins. Now they are at all of the…

American cities are huge money laundering fronts using real estate. https://www.fincen.gov/resources/advisories/fincen-advisory-... Criminals can use all-cash purchases to make payments in full for properties and evade scrutiny—on themselves and the origin of their wealth—that is regularly performed by financial institutions in transactions involving mortgages.9 All-cash transactions account for nearly one in four re…

[deleted]

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#48

Post by legitster »

8f2ab37a-ed6c wrote: post #44
legitster wrote: post #23

US cities are going to be in a world of hurt here pretty soon. Cities exist as job markets. And the primary force that keeps urban areas safe and friendly is the shoeleather of middle class workers coming in and out of work each day. The vacuum left has been filled with homelessness and poverty. These people were always here, but there was enough critical mass that they were at the margins. Now they are at all of the…

How cyclical is this? Say there is a middle-class-flight for the next few decades to the Peninsula or Marin, SF deflates for many years, then eventually artists start moving in for the cheap rent and abundant space, and the cycle starts all over again, the $10 cold brews return. I think this was somewhat the case with Downtown Los Angeles.

I've heard similar things about New York as well. In the 70s, NYC was a crime filled mess. But it was cheaaaaap. And the cheapness brought in young cool bohemians and now it has the opposite problem.

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#49

Post by beambot »

lattalayta wrote: post #22
theandrewbailey wrote: post #9

Earlier quoted context omitted.

Cutting rent means that the property is worth less. That means investors are demanding to know why the property is worth less, and the city collects less property taxes which might lead to politicians asking questions. While all that may be necessary, it won't happen until it's the only thing that can happen.

How much longer do you think property managers can hold out?

Lease non-renewals will continue over the next 4-5 years. TBD on when defaults hit a tipping point or runaway failure, but it doesn't bode well for the particularly-exposed regional banks.

> About 700 office leases are likely to expire in 2023 and another 600 are up in 2024 in the Financial District alone, said Avison Young’s insights and innovation head Dina Gouveia, for a total of about 10 million square feet of office space. In 2025 and 2026, another 10 million-plus square feet are likely to expire.

https://therealdeal.com/sanfrancisco/2022/10/17/downtown-sf-...

Re: 17.1 Salesforce Towers worth of empty office space spread across SF

#50

Post by umeshunni »

pessimizer wrote: post #27
legitster wrote: post #24

Earlier quoted context omitted.

They could cut rent drastically and people still might not show up. Also, if the owners start going bad on their debts there is a potentially cascading financial problem for the city of San Francisco

> They could cut rent drastically and people still might not show up. You could sell ice cream for 5 cents on a hot summer day and people might not buy it. Try it and find out; there has been speculation in the past that lowering prices raises sales.

You could sell ice cream for 5c in Antarctica in July and people might not buy it.
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