San Francisco office tenants are leaving a million-dollar tax break on the table.
No one has bitten in the two years since San Francisco authorized incentives up to $1 million for companies moving their offices to downtown, the San Francisco Chronicle reported, citing 2024 tax-return data from the San Francisco Treasurer and Tax Collector’s office.
The lack of interest left officials baffled.
It could be that slow-to-recover economic activity downtown didn’t have office users champing at the bit. There could also be recent tenants planning to apply for the tax break, which wouldn’t show up in 2024 data.
To be eligible for the tax break, companies must not have had locations in San Francisco in the three years before claiming the credit. The city had expected to extend about $4.4 million last year and $11.2 million this year.
The hope is that small companies might be interested in relocating downtown following the passage of Proposition M last year, which exempts businesses with less than $5 million in annual revenue from paying any gross receipts taxes.
“Our office is happy to help any business that wants to invest in San Francisco navigate the opportunities, incentives and connections to ensure long-term growth and success,” said Laurel Arvanitidis, the city’s Director of Business Development.
The office market in San Francisco has seen a wave of leasing activity recently from firms in the artificial intelligence sector.
AI giant Anthropic, for example, expanded its downtown headquarters by 100,000 square feet in September and is reportedly in talks to fill a vacant office building near Salesforce Park.
Sierra is close to inking one of the largest office leases of the year in the city with 300,000 square feet in China Basin.
Nvidia, the world’s most valuable company, which makes technology required for AI processing, just leased its first San Francisco office at Mission Rock.
Read more
Commercial
San Francisco
San Francisco moving closer to creating new downtown district to facilitate building conversions
Commercial
San Francisco
Mayor’s budget cuts taxes to lure tenants to Downtown SF offices