San Francisco Can’t Stop Real Estate Slide Even With AI

(VitalNews.org) – Artificial intelligence has been doing wonders for San Francisco’s real estate, but the technology isn’t enough to help the entire market, especially when it comes to office space.

The vacancy rate for San Francisco is now at over thirty four percent, according to a report from commercial real estate firm Cushman & Wakefield. With this, the rent price has dropped sixty-eight dollars per square foot, the lowest in over a decade. The city has been dealing with challenges of bringing people back into office after the pandemic and the resulting slowdown in the tech market, which has led to massive job cuts.

Artificial intelligence has been a crucial tool for the city and for the increase in office space being used. For example, OpenAI announced late last year that they would be leading five hundred thousand square feet of space in the neighborhood. In addition to this, Anthropic, an OpenAI competitor, and Scale AI have both said that they are leasing office space in the area.

“San Francisco is certainly the center of AI, but AI is not going to save the San Francisco commercial real estate market,” Robert Sammons, senior research director at Cushman & Wakefield said. “It will help.”

Many companies are looking to relocate to areas with higher quality and parts of the city that are more desirable. They are looking for more opportunities in areas where there are shops or restaurants in order to get staffers to come back into the office.
Said Sammons, “The best quality trophy space continues to perform well, because tenants want to be in the best locations with the best amenities around them.”
The firm stated that there are positive signs the market will get better, but Sammons said that it looks like there is more room for rent to fall and for vacancies to rise, especially as it gets close to election time.

Sammons said, “Sometimes tenants postpone making decisions when there are major elections.”

Copyright 2024, VitalNews.org