Commercial real estate landlords in San Francisco are giving up on their once prized properties as a result of a lack of hope stemming from office vacancies and crime. The downtown area is experiencing a downturn which is expected to worsen before it gets better, according to Manus Clancy of Trepp. The downsizing of some of the largest employers, the inertia of remote work, and a wave of downsizing by big tech companies, have caused the city's office vacancy rate to increase to almost 30% last quarter, up from less than 5% three years earlier, according to CBRE. The city's 18 million square feet of empty office space could house 92,000 people. Crime, or the fear of it, is also a factor with the number of assault cases and robberies increasing, even as rapes have declined, according to ABC 7. Crime, along with store closings and other quality-of-life issues, is resulting in an epidemic of negative headlines that are keeping tourists and workers away, according to Clancy. Meanwhile, housing demand is down and rental prices have dropped nearly 18% in the year through April. Startups are moving to the area, but as they are small by nature, they are not offsetting the population drain. The flight from the city has reduced the population by more than 65,000 people from April 2020 to July 2022, according to the Census Bureau. The fear of crime is pervasive and social media posts, including one from Elon Musk decrying "horrific" violent crime after the stabbing death of the tech executive Bob Lee, magnify the fear. The Tenderloin District, which is adjacent to Union Square and the Westfield Mall, has seen more homicides this year; however, citywide, San Francisco's murder rate is near the bottom of major cities, according to ABC 7.
San Francisco is losing appeal with empty offices and crime concerns