Report: San Francisco Companies Continue to Contract Office Space Amid Remote Work Trends
The commercial real estate industry has faced a number of challenges since the onset of the COVID-19 pandemic, and recent data from Cresa seems to affirm it. In its recent report titled “The Truth About Downsizing,” the commercial real estate and advisory firm finds that a large number of companies in the Bay Area are indeed contracting post-COVID-19 – whether for reasons of cost, restructuring or long-term planning.
Organizations across the board find themselves looking for smaller properties and more manageable footprints; Cresa analyzed data from 137 market requirements reflecting 3.88 million square feet of demand, but the sample set only reflected a real 3.04 million square feet. That 21.7 percent decrease signifies a significant shift in the market – but what companies are driving it?
The report broke down the demand by company type and industry. It seems as if traditional white-collar sectors like banking, finance, technology and law are cutting back the most, despite historically being the biggest users of space. Numbers are declining quite a bit in San Francisco, specifically, with tenants of spaces with over 100,000 square feet indicating plans to contract by an average of 27.4 percent; tenants between 50,000 and 100,000 square feet planning to contract by an average of 46.6 percent; and thos occupying 25,000 to 50,000 square feet planning to shrink by an average of 42.7 percent.
There are outliers though – AI has seen rapid expansion over the past year and is only poised to continue its growth into 2024. Cresa notes that startups within this space are leading tech as a whole in terms of expansion.