https://therealdeal.com/sanfrancisco/2023/04/10/office-vacancies-in-san-francisco-jump-to-a-record-33/ search Markets All MarketsChicagoLos AngelesNationalNew YorkSan FranciscoSouth FloridaTexas News ResidentialDevelopmentCommercialPoliticsTech Magazine Current IssueIssue Archives Events Future City 2023New York Forum 2023Industry Events Podcast + Video Video The Blueprint Coffee Talk Daily Dirt Live TRD Explains Paydirt The REInterview Real Estate Master Classes Podcast Deconstruct Partners Brand StudioSponsoredAdvertise TRD PRO Other About UsContact UsPrivacy PolicySubscribeCorporate Subscriptions AdvertiseHelp CenterCareersShop Markets All MarketsChicagoLos AngelesNationalNew YorkSan FranciscoSouth FloridaTexas News ResidentialDevelopmentCommercialPoliticsTech Magazine Current IssueIssue Archives Events Future City 2023New York Forum 2023Industry Events Podcast + Video Video The Blueprint Coffee Talk Daily Dirt Live TRD Explains Paydirt The REInterview Real Estate Master Classes Podcast Deconstruct Partners Brand StudioSponsoredAdvertise TRD PRO All Markets * Texas * National * Chicago * San Francisco * South Florida * New York * Los Angeles Sectors * Tech * Politics * Development The Real Deal Logo Subscribe TRENDING Arbor forecloses on $229M portfolioArbor forecloses on $229M portfolioWhat's next for Signature's loans? What's next for Signature's loans? Reuben brothers finally foreclose on Century Plaza Reuben brothers finally foreclose on Century PlazaCheck out some of the real estate tycoons on Forbes' billionaires listCheck out some of the real estate tycoons on Forbes' billionaires list Commercial San Francisco A Office vacancies in San Francisco jump to a record 33% Vacancies in Silicon Valley also hit a record high of 23%, according to report (Illustration by The Real Deal with Getty) (Illustration by The Real Deal with Getty) Apr 10, 2023, 2:49 PM By * TRD Staff Save article FONT SIZE AAA A Office vacancy in San Francisco has shot up to nearly 33 percent, a record, with the rate of empty offices in Silicon Valley 9 points behind. The proportion of empty offices in San Francisco hit a "new all-time high" of 32.7 percent in the first quarter, up from 32.1 percent from late last year, the San Jose Mercury News reported, citing a report from Savills. Silicon Valley's office vacancy rate jumped to a "new historical high" of 23.1 percent during the same period, up from 22.7 percent. The increased office vacancy rates in San Francisco and the South Bay follow an era of remote work and come amid a wobbly economy jolted by job cuts in the tech and biotech sectors. Both regions face grim prospects for the rest of the year, according to Savills, a commercial real estate firm based in London. "With economic uncertainty, slow return-to-office utilization and an ongoing correction in the technology sector, it is no surprise that the San Francisco office market has gone from having the lowest availability levels in the country pre-pandemic to having the highest availability levels in just over three years," Savills said in its report. Office rents in San Francisco averaged $5.89 per square foot from January through March, down from $5.94 per square foot from October through December last year. "We expect office availability (in San Francisco) to continue to increase in 2023 as the slowdown in the technology sector persists," Savills said. Office rents in Silicon Valley averaged $4.99 a square foot during the same period, up from $4.95 a square foot late last year. "Office space demand (in Silicon Valley) has been down significantly as the technology sector continues to undergo a serious correction with mass layoffs and a general freeze in office leasing," Savills reported. Soaring office vacancies in San Francisco mean that loans for big office buildings could tumble into default. Worse, they could turn into foreclosures and property seizures. "With worsening underlying market fundamentals and looming loan maturities, expect more (San Francisco) office property distress to occur in 2023 as many owners find themselves underwater," Savills said. A commercial real estate property is considered "underwater" if its total loan debt exceeds the value of the building. In Silicon Valley, tech firms have scaled back plans to rent or build new office complexes and in some cases are trying to sublease or sell their office properties. "The Silicon Valley office market continues to see record-high availability levels as occupiers have pulled back amid the correction in the technology sector," Savills said, adding the region should "expect another slow year" in the office sector. -- Dana Bartholomew Read more San Francisco Bay Area's office market is good, but for how long? Bay Area's office market is good, but for how long? San Francisco Tech companies list corporate campuses in Silicon Valley Tech companies list corporate campuses in Silicon Valley San Francisco Office vacancy in San Francisco climbs to 30% Office vacancy in San Francisco climbs to 30% Tags Commercial Real Estate Top stories All Markets * All Markets * Chicago * Los Angeles * National * New York * San Francisco * South Florida * Texas * Houston Arbor forecloses on $229M portfolio * New York What's next for Signature's loans? * Los Angeles Reuben brothers finally foreclose on Century Plaza * National Check out some of the real estate tycoons on Forbes' billionaires list Recommended All Markets * All Markets * Chicago * Los Angeles * National * New York * San Francisco * South Florida * Texas TRENDING Arbor forecloses on $229M portfolioArbor forecloses on $229M portfolioWhat's next for Signature's loans? What's next for Signature's loans? Reuben brothers finally foreclose on Century Plaza Reuben brothers finally foreclose on Century PlazaCheck out some of the real estate tycoons on Forbes' billionaires listCheck out some of the real estate tycoons on Forbes' billionaires list Commercial San Francisco A Office vacancies in San Francisco jump to a record 33% Vacancies in Silicon Valley also hit a record high of 23%, according to report (Illustration by The Real Deal with Getty) (Illustration by The Real Deal with Getty) Apr 10, 2023, 2:49 PM By * TRD Staff Save article FONT SIZE AAA A Office vacancy in San Francisco has shot up to nearly 33 percent, a record, with the rate of empty offices in Silicon Valley 9 points behind. The proportion of empty offices in San Francisco hit a "new all-time high" of 32.7 percent in the first quarter, up from 32.1 percent from late last year, the San Jose Mercury News reported, citing a report from Savills. Silicon Valley's office vacancy rate jumped to a "new historical high" of 23.1 percent during the same period, up from 22.7 percent. The increased office vacancy rates in San Francisco and the South Bay follow an era of remote work and come amid a wobbly economy jolted by job cuts in the tech and biotech sectors. Both regions face grim prospects for the rest of the year, according to Savills, a commercial real estate firm based in London. "With economic uncertainty, slow return-to-office utilization and an ongoing correction in the technology sector, it is no surprise that the San Francisco office market has gone from having the lowest availability levels in the country pre-pandemic to having the highest availability levels in just over three years," Savills said in its report. Office rents in San Francisco averaged $5.89 per square foot from January through March, down from $5.94 per square foot from October through December last year. "We expect office availability (in San Francisco) to continue to increase in 2023 as the slowdown in the technology sector persists," Savills said. Office rents in Silicon Valley averaged $4.99 a square foot during the same period, up from $4.95 a square foot late last year. "Office space demand (in Silicon Valley) has been down significantly as the technology sector continues to undergo a serious correction with mass layoffs and a general freeze in office leasing," Savills reported. Soaring office vacancies in San Francisco mean that loans for big office buildings could tumble into default. Worse, they could turn into foreclosures and property seizures. "With worsening underlying market fundamentals and looming loan maturities, expect more (San Francisco) office property distress to occur in 2023 as many owners find themselves underwater," Savills said. A commercial real estate property is considered "underwater" if its total loan debt exceeds the value of the building. In Silicon Valley, tech firms have scaled back plans to rent or build new office complexes and in some cases are trying to sublease or sell their office properties. "The Silicon Valley office market continues to see record-high availability levels as occupiers have pulled back amid the correction in the technology sector," Savills said, adding the region should "expect another slow year" in the office sector. -- Dana Bartholomew Read more San Francisco Bay Area's office market is good, but for how long? Bay Area's office market is good, but for how long? San Francisco Tech companies list corporate campuses in Silicon Valley Tech companies list corporate campuses in Silicon Valley San Francisco Office vacancy in San Francisco climbs to 30% Office vacancy in San Francisco climbs to 30% Tags Commercial Real Estate Top stories All Markets * All Markets * Chicago * Los Angeles * National * New York * San Francisco * South Florida * Texas * Houston Arbor forecloses on $229M portfolio * New York What's next for Signature's loans? * Los Angeles Reuben brothers finally foreclose on Century Plaza * National Check out some of the real estate tycoons on Forbes' billionaires list Recommended All Markets * All Markets * Chicago * Los Angeles * National * New York * San Francisco * South Florida * Texas * About us * Contact us * Privacy policy * Subscribe * Corporate Subscriptions * Advertise * Help center * Careers * Shop All rights reserved (c) 2023 The Real Deal is a registered Trademark of Korangy Publishing Inc. 450 West 31st Street, New York, NY 10001 Phone: 212-260-1332 * * * * * *