San Francisco Mayor London Breed tried luring tech workers back to their downtown offices last summer with pop-up markets and festivals, even adding “ambassadors” to hail commuters.
But now she says the lost tech workers that helped empty a quarter of the city’s offices may be gone for good, Bloomberg reported. The city hopes to replace them with green and biotech companies.
“Life as we knew it before the pandemic is not going to go back,” Breed told Bloomberg. “This whole work-from-home thing is here to stay.”
San Francisco has struggled to rebound from the pandemic as office vacancies hit a record 25.5 percent in the third quarter as employers such as Salesforce and Twitter ditched their office desks.
The city’s Downtown faces 1,300 expiring office leases by 2024. Tech tenants account for the lion’s share of the lapsing deals.
Return-to-office rates have stuck at 40 percent of pre-pandemic levels, according to security firm Kastle Systems. Tech-oriented jobs at such companies as Salesforce, Uber Technologies, Google and Meta Platforms make up 10 percent of all employment, according to Moody’s Analytics. With many employees working remotely, their former offices remain empty.
Breed sees an opportunity for San Francisco to “reinvent, recreate and reinvest” in vacant commercial properties. That means luring other types of office tenants – notably in the biotechnology and green-tech industries.
To prepare for the long-term shift, San Francisco has to “get creative and diversify,” Breed said, as it did in offering incentives to lure companies during past downturns.
The mayor expressed hope that life-science firms could help fill empty buildings and boost the city’s economic recovery.
Demand for health, research and lab space has been strong across the U.S. commercial real estate market. The San Francisco Bay area is the No. 2 market for life-science tenants behind Boston, according to Jones Lang LaSalle.
After San Francisco-based Dropbox shifted to mostly remote work, KKR paid more than $1 billion to buy its San Francisco complex and repurpose it for life science tenants.
Breed said a key part of San Francisco’s recovery was reversing the city’s reputation for out-of-control crime, open drug use and rampant homelessness. At the same time, she acknowledged concerns about public safety from residents and commuters.
The San Francisco Police Department is short 500 officers, while concerns about crime contributed to the June recall of District Attorney Chesa Boudin.
— Dana Bartholomew
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