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San Francisco’s office demand is up 10%, says report on tenant tours

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San Francisco’s office demand is up 10%, says report on tenant tours


San Francisco’s high office vacancy rate has sparked worries that property tax revenue will plummet, leading to cuts in city services.

Mit Desai / 500px / Getty Images

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San Francisco’s commercial real estate fortunes may finally be turning.

Office demand in the city increased 10.2% in the second quarter of 2023 compared with the first quarter, according to data from real estate tech firm VTS. The researchers also found that the city has, since March, seen more prospective office tenants looking for spaces larger than 50,000 square feet.

The report comes after San Francisco’s office vacancy rate hit a record-high 29.4% in the first quarter of 2023 — January through March — and indicators pointed to a potential further rise. Despite pushes by major tech firms like Salesforce and Meta to get workers back in the office, the Bay Area has the highest percentage of remote workers of any U.S. metro area. (Wealthier workers are more likely to work from home, as are, of course, employees who can do their jobs on a computer.)

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San Francisco’s office vacancies, in tandem with the exit of key retail businesses like Westfield San Francisco Centre, have sparked anxieties about the future of downtown San Francisco. This includes worries that the city’s property tax incomes will plummet, leading to city service cuts. Westfield is giving up its San Francisco Centre property after falling to 55% occupancy.

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But the VTS data is a bright spot for the city’s commercial real estate landlords and downtown businesses. The firm calls its office demand index “the earliest look into the health of the office market.” Using touring activity, VTS measures demand by tracking the percentage of total office space prospective tenants are looking to rent.

The growing demand has been driven in part by the explosion of new artificial intelligence companies, VTS CEO Nick Romito told Bloomberg, which first wrote about the report. Though a new San Francisco-based AI startup seems to emerge every week, much of the nascent technology’s development appears to be centered south of the city at Mountain View-based Google, Menlo Park-based Meta and Santa Clara-based Nvidia. 

New York and San Francisco were the only mentioned cities with year-over-year demand growth last quarter; VTS found that office demand went down in Los Angeles, Seattle, Chicago, Boston, and Washington, D.C. 

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San Francisco has a long way to go in filling up or converting its floors of empty workspace. The city’s office demand is still shy of Los Angeles’ and New York’s, according to VTS, and a commercial real estate researcher told SFGATE in April that vacancies may peak next winter.

Hear of anything happening at a Bay Area tech company? Contact tech reporter Stephen Council securely at stephen.council@sfgate.com or on Signal at 628-204-5452.



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San Francisco, CA

Quick-thinking 3-year-old saves neighbor's San Francisco home from fire

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Quick-thinking 3-year-old saves neighbor's San Francisco home from fire


A 3-year-old boy is being credited by San Francisco firefighters with saving an apartment from burning down.

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Firefighters arrived at the apartment around 1 p.m. Sunday afternoon on 35th Avenue in San Francisco’s Outer Richmond neighborhood.

Flames on the balcony were visible from across the street where an observant little boy would spot them right through his front window.

“It was right there,” little Luca Sekula pointed across the street at the home he saw on fire, and knew exactly what to do.

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“Mom and dad, call 911,” he recalled telling his stunned parents, who urgently followed his directions.

“I couldn’t believe it, and I thought, I’m just so glad he said something,” Luca’s mother, Kate, said. “Because I couldn’t imagine any worse damage if that thing just continued to burn.”

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Thanks to Luca’s quick thinking, firefighters soon arrived and managed to stop the flames from spreading beyond the balcony.

“Firefighters came and put it out with their hose and a ladder was up there and there was a ladder truck there just like this one,” the tiny hero said while demonstrating with his toy fire engine.

It’s a real-life situation that he has pretended to handle countless times.

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He has a fleet of toy fire engines and a collection of helmets that he loves to share with visitors, but it’s an animated pop-up book where he learned exactly what to do in an emergency.

“Ever since he could wobble around the neighborhood he loves firefighters,” Luca’s father, Nate, said. “It’s pretty amazing, yeah. He’s our hero.”

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And the fire department hopes other kids will follow his lead.

“Tell your children it’s okay to report an emergency, and it’s okay to let people know that fire, police, medical, services need to be summoned,” said Captain Jonathan Baxter of the San Francisco Fire Department.

Luca knows how to dial 911, and already has plans to help more than just his neighbors in the future.

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“I want to be a firefighter when I grow up.”

Capt. Baxter believes the fire was caused by a cigarette left unattended.

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The man who lives in the apartment where the fire broke out didn’t want to talk on camera but told KTVU no one got hurt, and the damage was isolated to the balcony.

He is very grateful for the little boy’s quick thinking in a situation that could have been much worse.



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San Francisco, CA

San Francisco House Hits Market for Half Its Worth, but You Can't Move In Until 2053

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San Francisco House Hits Market for Half Its Worth, but You Can't Move In Until 2053


A rare opportunity has emerged in the heart of San Francisco’s coveted Russian Hill neighborhood — but you’ll have to be patient if you want to buy it.

A charming three-bedroom Edwardian home has been listed at an astonishing $488,000 — a fraction of its true market value. However, potential buyers should be aware of a significant caveat.

The house, currently occupied by a protected tenant, comes with occupancy rights that may not be available for 29 years. The current tenant pays just $416.67 a month in rent, far below the market rate, and the resident “has possible occupancy rights until 2053,” the Daily Mail reports.

Despite this unusual arrangement, the property has attracted considerable interest. Over the weekend, prospective buyers formed lines around the block for a chance to view the house. By Sunday, the home was already under offer.

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Located at 30 North View Court, this fully-detached Edwardian-style family home features an enviable position in one of San Francisco’s most desirable areas. The low listing price immediately caught the attention of many, especially given that the property could potentially generate an estimated $3,360 a month in rent.

The property came onto the market following the death of its previous occupant, who was older than 100 years old and passed away of natural causes inside the home.

While the situation may be complex, the allure of owning a piece of real estate in Russian Hill at such a bargain price continues to draw interest from potential buyers.
For now, it remains to be seen who will take on this unique real estate challenge and what the future holds for this historic home.



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San Francisco, CA

Construction Starts for Two Affordable Housing Projects at Transbay Block 2, San Francisco – San Francisco YIMBY

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Construction Starts for Two Affordable Housing Projects at Transbay Block 2, San Francisco – San Francisco YIMBY


Construction has started for two affordable housing complexes rising on Transbay Block 2 in East Cut, San Francisco. While site work has been active since the start of this year, its official groundbreaking ceremony was held late last month. Once complete, the block will add 335 new apartments in the high-rise neighborhood by Rincon Hill.

Transbay Block 2 construction detail, image by Andrew Campbell Nelson

The taller complex will be Transbay 2 East, a 17-story family housing project led by Mercy Housing. The complex will offer 183 units affordable to households earning between 20-80% of the area’s median income. Kennerly Architecture is responsible for the design.

Transbay Block 2 West is being developed by the Chinatown Community Development Center. The nine-story structure will create 151 units of affordable housing for seniors. The design team includes Mithun and Kerman Morris Architects.

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Transbay Block 2 West aerial perspective, rendering by Mithun

Transbay Block 2 East (left) and West (right) aerial perspective, rendering by Mithun

Transbay Block 2 East seen from Main Street and Clementina Street, rendering by Kennerly Architecture & Planning

Transbay Block 2 East seen from Main Street and Clementina Street, rendering by Kennerly Architecture & Planning

Both structures will have a distinct architectural treatment, though the planning documents write that “the two buildings are a complementary pair, sharing a unifying low-rise townhouse massing fronting the park and a common masonry material sensibility establishes the block as its own precinct in contrast with the glassy towers across Folsom Street.” Facade materials will include pre-cast panels of varied textures, metal mullions and spandrels, curtainwall glass, and concrete accents. Wood accents will add some naturalistic materials along the street level.

The affordable housing block will be unified with an approachable landscaping scheme designed by Plural. Carved between the two buildings, a pedestrian mew will connect pedestrians from Folsom Street to the future Transbay Block 3 Park. The mews will pass by a central courtyard and secured childcare open space.

Transbay Block 2 East aerial view over the proposed park, rendering by Kennerly Architecture & Planning

Transbay Block 2 East aerial view over the proposed park, rendering by Kennerly Architecture & Planning

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Transbay Block 2 image from Beale Street, image by Andrew Campbell Nelson

Transbay Block 2 image from Beale Street, image by Andrew Campbell Nelson

Transbay Block 2 seen from the new park, rendering by Kennerly Architecture & Planning

Transbay Block 2 seen from the new park, rendering by Kennerly Architecture & Planning

The 0.98-acre construction site occupies a third of the former Transbay Bus Terminal. Now, the site is a community space dubbed the Crossing at East Cut. Block 2 is currently occupied by a community room, surface parking, a children’s play area, and a dog run.

Across from the Block 3 Park, Hines has originally pursued plans for a 47-story residential tower. The tower would have created 681 apartments, of which nearly three hundred would have been priced below market-rate. However, last week, Patrick Hoge reported for the San Francisco Examiner that Hines had filed to make a payment to the Office fo Community Investment and Infrastructure, thus losing their exclusive option for the development.

Transbay Block 2 3 and 4 site map

Transbay Block 2 3 and 4 site map

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Similarly, Hines recently missed a $5 million payment to the city for failing to start work on Parcel F, the 61-story mixed-use skyscraper on Howard Street. Hines secured a loan extension from JP Morgan Chase Bank and United Overseas Bank in early July last year for construction at Parcel F, only to list the property for sale by the end of the month. Salesforce had signed an agreement in 2018 to be the anchor tenant of the planned skyscraper, but backed out of the agreement in the fall of 2020.

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