San Francisco's Downtown Office Vacancies Reach Alarming Levels
Downtown San Francisco is facing a grim state as vacancies rise and property owners shed leases faster than new ones can be signed. The preliminary office vacancy rate for the second quarter of 2023 is at 31.8%, with negative net absorption indicating a potential increase in the vacancy rate. While AI companies are seeking to lease over 700,000 square feet in the city, their footprints are still smaller compared to big tech firms. The office delinquency rate for commercial mortgage-backed securities is at 4.02%, signaling distress in the commercial real estate sector. Property tax appeals have reached their highest level since 2013-2014, reflecting declining confidence in property values. The return-to-office rate in the San Francisco metro area is at 45.5%, impacting the infrastructure and economic ecosystem centered on Downtown.