The Future of Downtown and the Office Market

by Colin Shinners, BOMA SF President and Managing Director, Vanbarton Group LLC

With the return of the BOMA SF member luncheon (aptly known as “BOMA Chicken”), I wanted to reflect on some of the topics that were discussed as well as the current office market environment and the future of downtown San Francisco.

The San Francisco office market has been a cornerstone of the City’s economy for many years and was thriving until March 2020. While San Francisco boasted some of the lowest COVID death rates in the country, the slow reopening of the City allowed the biggest office users (i.e. tech companies) to realize that a physical office was no longer necessary for success. As a result, San Francisco has experienced one of the weakest recoveries of any downtown in the country, and the City’s office vacancy rate has hit an all-time high (nearly 30%). This, compounded with other issues the City is experiencing (dysfunctional government, crime and safety problems, homelessness, etc.), and a rise in interest rates, has made the once highly coveted city unattractive to institutional investors and lenders.

Where do we go from here?

In some ways, we have the ability to influence the future and the market, while vicious and unapologetic, will take care of the rest. BOMA San Francisco continues to work hard to help shape new policy and generate new ideas for the City of San Francisco to revitalize downtown. We are currently engaged in a discussion with Mayor Breed, SF Board of Supervisors President Aaron Peskin, and a coalition of various SF business organizations to move an omnibus piece of legislation focused on reforming the tax code, reducing regulatory barriers to housing development and business permitting, and making strategic investments for “placemaking” downtown. While these initiatives will surely help, the return of people to downtown and the revitalization of a strong local economy will ultimately be the key to San Francisco’s success.

There seems to be some optimism growing among the office leasing brokerage community that office leasing demand is starting to slowly return. Some of the drivers of this include companies finally enforcing their return-to-office plans and the rapid pace

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