San Francisco’s office market is rising from the dead.
In the hardest hit office market in the nation, the number of companies hunting for cubicle space is rising, with AI firms leasing blocks of offices and sellers starting to close office deals again, the Wall Street Journal reported.
The city’s Downtown had suffered an exodus of tech workers during a pandemic shift to remote work. One in three offices stood empty. Building values fell. Crime rose. Businesses such as Nordstrom fled.
A local investment group bought a tower at 350 California Street for $61 million, a fifth of what it was worth before the pandemic. Other office sales have gone for half or less of the property’s value before 2020.
The first few sales are helping peg the value of San Francisco’s office inventory, according to WSJ. That knowledge tells landlords what to ask for their properties should they wish to sell. It tells investors how much of a discount to expect.
New valuations have helped reset office rents.
Swig and SKS Partners, which acquired 350 California Street, now ask rents between $50 to $70 per square foot. Before the pandemic, asking rents for comparable offices hovered at $90 a square foot, Connor Kidd, CEO at Swig, told WSJ.
San Francisco office landlords had for decades charged some of the highest rents in the country for decades, with some companies fleeing for cheaper climes. Now rent levels have dropped enough that tenants once priced out of the city can afford offices.
SKS and Swig buy office tower at 350 California Street for $61M
OpenAI may sublease part of Uber headquarters in SF’s Mission Bay
AI firm Anthropic to take 230K sf at Slack headquarters in SF
Much of the demand has come from artificial intelligence firms. Six companies, including Hive AI and Hayden AI, have leased 150,000 square feet, according to CoStar. Anthropic is also close to subleasing 230,000 square feet at the former Slack headquarters, while ChatGPT creator OpenAI is cutting a deal with Uber Technologies to sublease 200,000 square feet.
— Dana Bartholomew
San Francisco’s office market is rising from the dead. In the hardest hit office market in the nation, the number of companies hunting for cubicle space is rising, with AI firms leasing blocks of offices and sellers starting to close office deals again, the Wall Street Journal reported. The city’s Downtown had suffered an exodus
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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.