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Downtown San Francisco’s Real Estate Recovery Depends on Tech Industry – Globe St.


After the COVID pandemic pummeled downtown San Francisco with a one-two punch of low office attendance and many retail business closures, the tech industry appears poised to revive the market’s real estate usage.

Downtown’s daytime population should soon swell as many workers return to the office in coming months. The extent of that return will depend heavily on tech employees, who will set the tone for employees in other industries.

Even as office workers return in greater numbers, San Francisco still has a long way to go to fill its 20 million sq. ft. of currently vacant office space. CBRE estimates that at least 100,000 new workers are needed to accomplish this and that Tech is the only single industry in San Francisco that can do it.

The tech industry accounts for 35% of office-using employment in San Francisco. Since 2000, Tech employment in the city grew fivefold to 120,000 workers in 2021. Over the same period, Professional & Business Services employment dropped by 10% to 114,000; Finance, Insurance & Real Estate (FIRE) fell by 6% to 60,000; and Legal lost 7% to 14,000. Although Life Sciences employment increased by sixfold to 12,000 workers, it is only a fraction of tech sector employment.

Based on those numbers, it’s evident that encouraging more tech industry growth and enticing tech workers to use their offices more frequently are necessary to help reinvigorate downtown San Francisco. There were 328,000 office-using jobs in San Francisco last year, just 4% below the pre- pandemic level in 2019.

Tracking return-to-office progress helps determine how soon San Francisco’s downtown market can fully recover. Two good indicators are total BART mass transit passengers exiting at downtown San Francisco stations and total office building entry card swipes. While BART exits are rising, they were only at 28% of pre-pandemic levels as of March 2022.

Office building entries for the broader San Francisco metropolitan area also are rising but were at just 34% of pre-pandemic levels on April 6th, according to building security provider Kastle Systems.

Many companies are initially bringing employees back to the office two to three days per week. CBRE Econometric Advisors forecasts that workers will be in the office on average 3.4 days per week by 2023, just one day a week less than they were prior to the pandemic. It’s possible that many workers will once again fully embrace the in-person interaction that an office environment provides, leading to an extended in-office work week. San Francisco is an innovative city that relies on such interaction, so it’s time to help kick start the next office-using boom that might be on the horizon.

Colin Yasukochi is Executive Director of CBRE Tech Insights.



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