San Francisco Mayor London Breed wants to fill Downtown’s growing number of empty offices by luring tenants through lower taxes.
In addition to plugging the deficit, her $14.6 billion budget proposes to fill vacant Downtown offices by cutting the commercial rent tax on subleased spaces through 2029, the San Francisco Business Times reported. The specific reduction was not disclosed.
The tradeoff: kids. The tax now generates funds for early childcare and education and is levied on both commercial leases and subleases.
Breed’s $14.6 billion budget proposal aims to plug a $780 million deficit projected through 2025 by shaving city department budgets. At the same time, it aims to expand homeless services, hire more cops and clean up the city’s deteriorating streets.
As nearly one in three offices now stands vacant, Breed has shifted to revitalizing the city’s struggling Downtown.
To that end, her budget contains business tax reforms and incentives, including delaying increases for certain industries until 2025 and granting tax credits to businesses that open new offices Downtown.
The moves are expected to cut revenues by $15 million this fiscal year and $22 million in the following fiscal year.
Since tech companies led the move to working at home during the pandemic, office vacancy in the city’s Downtown in the first quarter reached a record 30 percent – or 35 million square feet of offices available for direct or sublease, according to CBRE.
Pinterest, Meta, Reddit, Salesforce, Slack, Uber, Autodesk, Qualia Labs and Twitter have all vacated or reduced their office space, putting millions of square feet onto the sublease market.
This month, Visa listed its Downtown San Francisco headquarters for sublease before a planned move to a new hub just south of Oracle Park. The sublease tally: 190,000 square feet.
The Business Times did not spell out exactly how much Breed’s budget would cut commercial rent taxes on subleased offices.
— Dana Bartholomew
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