Jan 14 2021: San Francisco office market in collapse as tech workers stay home

Back in Jan 14 2021: San Francisco office market in collapse as tech workers stay home

The pandemic has caused a major decline in the commercial real estate market in San Francisco. Office leasing activity dropped by 71% in 2020 compared to the previous year, and tenant demand decreased by half. The rise in vacancies was largely driven by sublease vacancies, which is unprecedented in San Francisco.

Tech companies, such as Google, Facebook, and Twitter, are re-evaluating the future of office culture and implementing long-term work from home policies. The impact of these changes on San Francisco's tech industry and office life is still unclear. However, there has been a recent increase in tenant demand as coronavirus vaccines are distributed.

Fast forward to Nov 04 2023: A new breed of companies expand in San Francisco’s prime areas

OpenAI, Anthropic, and Pear VC have subleased large office spaces in San Francisco as they continue to grow. OpenAI has leased two buildings totaling 486,600 square feet from Uber, while Anthropic has taken over the entire 250,000-square-foot building that was previously Slack's headquarters. Pear VC has subleased 30,000 square feet of office space from Dropbox.

With San Francisco's commercial buildings currently 35% vacant, there are ample options for companies looking to expand. These subleasing deals offer well-funded companies the opportunity to secure space at a more affordable price than traditional leases.

What factors contribute to the trend of fast-growing companies subleasing large office spaces in San Francisco while an earlier generation of companies downsizes?