Declining rents is more confirmation of the exodus from the Bay Area (as we’ve noted: here & here) as remote working allows city dwellers to leave the metro area for suburbs, Lake Tahoe, and elsewhere.
Danielle Hale, Realtor.com’s chief economist, said San Francisco-based technology “companies have been among the most flexible with allowing people to work remotely, and a lot of workers are taking advantage of that.”
Hale expects rents in the Bay Area to eventually recover, though it depends on how quickly people return to the office.
But with Contra Costa, San Francisco, and Santa Clara counties, all recording the most COVID-19 cases since the start of the pandemic – tech workers returning to offices might not be happening anytime soon.
As the work from home future marches on – companies are already scaling back on office space.
Real estate firm CBRE said San Francisco’s office vacancy rate has doubled this year to 8.3%, resulting in office rents dropping by at least 9%.
According to Bloomberg, Pinterest Inc. paid a $90 million penalty to terminate a lease at an office building in the downtown area because it wanted to “rethink where future employees could be based.”
Other companies like Hewlett Packard Enterprise Co. and Charles Schwab Corp. are leaving California for lower-cost states.
With major corporations also packing up their bags, this means workers will do the same, and continue to pressure rents in the Bay Area.
Hans Hansson, president of San Francisco office broker Starboard Commercial Real Estate, said the pandemic is like what happened after the 1989 earthquake when people fled the town due to “uncertainty.”
“We rely on tech,” said Hansson, who gets much of his business from early to mid-range startups with downtown offices. “They’re gone.”
Falling apartment rent prices could be an opportunity for folks who’ve been priced out of the area.
Robert Dumas, 58, drives for Lyft and Uber in the Bay Area – lives more than two hours away from the city. He said rent prices haven’t come down enough for him to move to the metro area.
“They haven’t come down enough to make a difference for me yet,” Dumas said, but he thinks they’ll continue to drop.
He said he’d noticed many more moving trucks in his travels as it becomes evident the great exodus from the Bay Area will extend well into 2021.