San Francisco Mayor London Breed says his city must adjust to a new reality in which tech workers who have either left the city altogether or are working remotely won’t be returning to the office anytime soon.
While Breed disagreed that it was an “exit” from San Francisco, he acknowledged that there have been devastating financial impacts on a city that has recently been one of America’s fastest-growing cities.
“Of course I’m concerned about the trend, but again, you know, this was a global pandemic where lives have been changed,” Breed told CNBC. “People work from home.”
“And I think most employees want some level of work from home when they go back to the office,” the mayor added. And many employers offer it as an option.”
Among major U.S. cities, San Francisco, which relies heavily on its tech sector, beat out New York as the city where workers plan to spend the least amount of time in the office, according to Bloomberg.
Salesforce, the software company that is San Francisco’s largest private employer, recently announced that it is downsizing office space in the city — the third time it has done so since the pandemic began two years ago.
Venture capital firm 8VC has moved its headquarters out of San Francisco to Austin, Texas. “San Francisco is probably the worst city in the United States,” its president, Drew Oetting, told Fortune last week.
In April, shortly before he made his $44 billion bid to buy Twitter, Elon Musk — a staunch critic of telecommuting at his own companies Tesla and SpaceX — quipped that Twitter’s offices could become a “homeless shelter.” “Become
Tesla, Oracle, NortonLifeLock, QuestionPro, Varo Bank, Palantir, Tanium and Sendoso are among the tech companies that have left the Bay Area in the past two years, according to BuildRemote.co.
The consequences have been devastating for San Francisco’s leisure and hospitality industries, which rely on foot traffic that has largely evaporated.
Office workers accounted for 72 percent of the city’s GDP — $531.28 billion in 2019 — before the pandemic.
But these workers are largely cut off from the office and the surrounding shops, restaurants, delis and mass transit that are now deprived of key revenue streams.
At the end of the first quarter of this year, 20.4 million square feet of office space was vacant, an all-time high, according to the San Francisco Chronicle.
Tech companies are also reluctant to call their workers into the office en masse, as employees have relished the time they’ve gained by not having to commute.
Other companies in the Bay Area have also embraced telecommuting, relocating their offices and headquarters to places like Florida, Texas, Tennessee, South Carolina, Georgia and other low-tax jurisdictions, lured by the lower cost of living. In the sun belt
Breed told CNBC that he was comforted by the fact that companies like Google, Autodesk and Twilio have expanded their commercial real estate footprints in the city.
“They’ve expanded their spaces, but they’ve also committed to San Francisco as their headquarters,” Breed said.
According to the mayor, “some companies are looking for other alternatives,” but San Francisco still has the highest concentration of venture capital firms “of any place in the country.”