San Francisco’s CRE Market: What’s Next?

Panel Explores Key Issues at BOMA Program

by Michael Choung, Vice President, BXP and BOMA SF Education Committee Chair

BOMA San Francisco hosted its first membership luncheon in over three years on March 22 at the City Club of San Francisco. With more than 200 principal and associate members in attendance, I moderated a panel discussion about the current state of the San Francisco office market and considering “what’s next?” We heard industry insights from Alexander Quinn, Senior Director of Research, JLL; Nicole Hom, Managing Director of Operations, JLL; Rod Diehl, Senior Vice President of Leasing, BXP; and Amy Campbell, AIA, Studio Director, Gensler.

Quinn kicked off the conversation with an economic overview of the downtown San Francisco market and the Bay Area at large and the impact of the recent regional banking turmoil. He also highlighted trends of “flight to quality” by office tenants toward highly amenitized buildings in desirable and safe areas with access to parking and public transportation.

The panel discussed the roadmap for upgrading and repositioning existing assets and creative reuse of vacant space based on current market demand as well as the due diligence required for office-to-residential conversions.

Diehl provided insight from a leasing outlook and feedback from the tenant and broker communities, while Hom highlighted the operational opportunities and challenges associated with these concepts. From a design perspective, Campbell shared the strategy behind a few of her clients’ projects and the considerations needed in the new world of “return to office.”

The panel also touched on topics ranging from the before and after of the pandemic; its impact on development, design, leasing and operations; the “amenity wars” of office landlords; talent acquisition and retention strategies; and opportunities to improve the overall tenant experience. The panel’s consensus was that building owners and employers alike must consider the means to incentivize office utilization and demonstrate the power of an in-person culture, whether through tangible amenities such as communal space, private huddle rooms, secure bike and repair facilities, or soft services like curated food and beverage options, locker and towel service, and creative lobby activations.

As public policy is intertwined with commercial real estate, the group also examined the impact of the macro economy and local government on the decision-making of both owners and occupiers of space. The panel closed the discussion with what they foresee as necessary steps towards the rebound and future of a renewed San Francisco. If the turnout from the BOMA San Francisco membership is an indicator, we are trending in the right direction.

The reunion among BOMA members served as a welcoming sight, especially as our industry professionals are collectively striving for more and more engagement from our associate partners and respective client bases. Although we are living in challenging economic times, the bustling City Club was a friendly yet critical reminder of BOMA San Francisco’s resiliency.