San Francisco’s California Street which passes through the heart of the city’s financial district used to be home of the country’s most valuable commercial real estate. 350 California Street boasts a 22-story glass and stone tower, worth roughly $300 million one year before the pandemic began, according to estimates from office brokers.
The formerly sought-after building is now for sale and expected to endure an 80 percent decline in value in only four years, with bids soon anticipated to come in at around $60 million.
While almost all US cities are struggling to some extent with the onset of remote work and less use of office space, the San Francisco market has been hit harder than most others. Extreme costs, crime and homelessness accompanied with the tech industry’s welcomeness to a hybrid work environment have sent one of America’s formerly most prosperous regions into a downward spiral.
Some of the city’s most noted commercial tenants like Meta and Salesforce are inundating the office market by subletting as opposed to waiting for their leases to be up. The entire financial district is feeling the absences of corporate employees which is forcing retailers, restaurants, and other small business to shutter.
According to CBRE Group Inc., vacant workspace in San Francisco is seven times higher than before the COVID-19 shutdowns, which equates to almost 30 percent of the city’s offices being empty.
J.D Lumpkin, executive managing director at Cushman & Wakefield real estate services firm stated, “We’re all really on the edge of our seats to see the first office trade in San Francisco.”
Currently, it is difficult to gauge exactly what commercial real estate in San Francisco’s financial district is worth since recent transactions have essentially been nonexistent. A sale of 350 California will establish new pricing for the area.
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