<i>Office vacancy rate in San Francisco just hit a new high</i> - <a href="https://news.ycombinator.com/item?id=33247863" rel="nofollow">https://news.ycombinator.com/item?id=33247863</a> - Oct 2022 (349 comments)
It's only going to get worse. Most companies are in the middle of 5- or 10-year leases, and aren't going to renew.<p>With this in mind, it still shocks me how the building managers in SF I work with have just gotten worse. They're bitter and mean and have made things so much harder for us (rather than being kinder and doing everything they can to retain us).<p>My point is that it's not nearly as bad as it's going to be, and there's nothing that makes me think it'll get better.<p>I really hope they turn a lot of these buildings into housing; we could kill two birds with one stone.
Not a surprise there. I was talking to a CEO friend of mine whose company had just leased a huge office right before the pandemic for five years. They closed all their small offices around town and moved everyone early during the pandemic, which means most people have never seen the new building. Their stuff is just in boxes on desks. They can't get out of the lease early, so for now the leadership shows up once a week for meetings and that's about it.<p>But in about three years they will ditch the lease, as will many other companies in similar situations. This is just the beginning.<p>On the plus side, here in Cupertino there has been an eternal debate what to do with the empty land the old mall used to sit on. They wanted to build 3M square feet of office space, but now they probably won't do that, which is a big win for the community who wants it to be retail or housing and not offices.
Will be interesting to see changes taking place in urban planning as the new era of working from home begins to effect the urban center and suburban areas moving forward. I've noticed it in the lunch spots in my suburban town- all way more crowded than they used to be and went through a transition period where they had to get used to the new volume.<p>Feels like a new era of some big changes in relation to city planning. Cities will have to build housing to account for the loss in tax base of commercial real estate.
The contrast to lab rents and the bay area life sciences market is striking. [1]<p>Near 0 vacancies, rising rents[2] and a huge boom in construction.<p>It'll be a painful shakeup, but eventually the market will normalize to a price where renovating office space for labs and new hybrid work environments makes sense. Anecdotally, family and friends in structural and architectural fields in the bay are busier than ever with these types of retrofits.<p>1 - <a href="https://kidder.com/market-reports/san-francisco-life-science-market-report/" rel="nofollow">https://kidder.com/market-reports/san-francisco-life-science...</a>
2 - <a href="https://www.bizjournals.com/sanfrancisco/news/2021/11/12/bay-area-lab-demand-growing.html" rel="nofollow">https://www.bizjournals.com/sanfrancisco/news/2021/11/12/bay...</a>
Much as I would like the opposite to be true, it's good to see the reality check at the bottom:<p><i>> And once again, while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to the relative value of each use and the cost of conversion.</i><p>Residential conversion always comes up in these discussions, but the truth is it's a much more limited opportunity than it appears at first glance.
I'm curious to see if this change in the urban landscape is going to lead to a modern office loft type situation like NYC saw in the 60-70s with former commercial spaces being available under specific tenant laws to artists.
WFH is going to have a huge impact on urban planning. But then again when did the urban planners really did work for the benefit of all the people?<p>If you have a huge house with a garden and can work from home I think you just won the lottery.<p>All the good urban planning in European cities I think comes at the expense of comfort of how people live.<p>If you live in a 85sqm in a city you are lucky but probably pay too much for rent anyway and have to suffer noisy neighbors and construction.
I would think this is a lower bound too, since there's a lot of companies with long leases signed before the pandemic either eating crow or subletting until the lease expires.<p>And then if you count all the companies doing a return to office motion just to justify the real estate, it could go even higher...<p>I don't think we will know the true impact of the WFH era for another few years.
I'm curious to see what will happen with the bagholders of office real estate. Will they try to reinvent themselves as mixed use residential/commercial? Or is it possible we will see a wave of defaults as vacancy rates continue to climb?