Friday, March 12, 2021

The Collapse of the San Francisco Office Space Market Continues

Salesforce, San Francisco's largest private employer, has canceled its 325,000-square-foot lease at the unbuilt Parcel F tower in San Francisco’s Transbay neighborhood, reports the San Francisco Business Times.

This is only the latest example of SF office space being canceled.

The lease on Yelp’s 161,876-square-foot office space at 140 New Montgomery St. in the city is up in October 2021 and the entire space has been listed for rent. WeWork has closed five downtown locations.

The Mission Bay headquarters once leased by Dropbox is being sold, according to the Times. The company adopted a remote work policy in October 2020. Old Navy also announced in February it would be shutting down its Mission Bay offices and moving into parent company Gap Inc.’s workspace.

In August 2020, Pinterest paid $89.5 million to terminate its lease for 88 Bluxome in the foggy city.

No one knows what the post-COVID economy will look like, but obviously, some pretty serious SF players are not expecting the need for office space to be anywhere near the pre-COVID levels.

The average occupancy rate of commercial properties across 10 major U.S. cities is currently as follows (via Kastle Systems).



  1. Having been a freelance software engineer for 30 years, I know that working by oneself is not for everyone, being an introvert, meaning more inner-directed and getting energy from quiet time, than an extrovert, outer-directed and getting energy from social interaction, helps a lot. Then there's the matter of motivation and distraction, difficult for many people when they must manage these aspects of work largely for themselves.

    So I think there will be a backlash eventually to the remote-working fad, pushed on firms by pandemic measures and attractive in workspace cost-savings, but ultimately not a good fit to many workers' personalities and not conducive to the team atmosphere needed for many projects. "Zoom fatigue" is already setting in. I expect in a few years the vacancies will be filled and there may be regret that projects were canceled since they take so long to plan and execute.

  2. One of the virus's lasting effects will be accelerating the move from offices to working remotely. You could see major shifts in where workers are located. If people can work remote they can be anywhere in the world.