San Francisco Mayor Admits Her City Needs To Adjust To New Reality That Many Employees Will Be Out Of Offices
San Francisco’s mayor has denied there has been an “exodus” from her city, but admits a major change is affecting local businesses.
Speak with CNBC’s “The News with Shepard Smith” Last Friday, San Francisco Mayor London Breed said her city will have to adapt to the new reality that many employees are no longer coming to the office.
Remote working and working from home became the norm for millions of workers around the world during the Covid-19 pandemic. And many employees choose not to return to the office, but instead continue to work from home, or adopt a hybrid work pattern.
Exodus from the city?
The San Francisco Bay region is home to many major tech companies, and the city itself took a $400 million hit in tax revenue in 2021, as companies moved to other cities and transitioned to remote working, CNBC reported.
Mayor London Breed acknowledged that tech workers have been slower to return to physical spaces in San Francisco than in other major cities.
“I wouldn’t call this an exodus. I would call it a change,” Breed said. “We have been through a global pandemic. People have started working from home. And I think most employees want some level of homework when they return to the office. And many employers offer that as an option.”
According to CNBC, office vacancy rates in San Francisco rose from 23.8 percent in the prior period to 24.2 percent in the second quarter, according to research by CBRE.
Mayor Breed’s office estimates that a third of San Francisco’s workforce is now remote and out of town.
Last year, that resulted in a $400 million tax bill, according to the Office of the Controller in San Francisco.
“Of course I’m concerned about the trend, but again, you know, this was a global pandemic where life has changed,” Breed said.
San Francisco and indeed the US state of California also has to deal with big tech companies relocating to other US states.
Elon Musk has repeatedly warned of “overburdening” and “over-regulation” and “over-procedure” in California as reasons for companies to move to other states such as Texas or Florida.
In December 2020, Musk announced that he had personally left California after selling his Bel Air properties.
Musk personally moved to Texas after living in Los Angeles for 20 years.
Then he heeded his warning in October 2021, after clashing repeatedly with California officials last year, also moving Tesla’s headquarters to Texas.
Other tech giants like Oracle have moved their headquarters from California to Texas.
Hewlett-Packard Enterprise (HPE), one of the founders of Silicon Valley, California’s tech homeland, also revealed it would be leaving the “golden state” and moving its headquarters to Texas.
A number of other companies have already left the San Francisco Bay Area, including data mining provider Palantir Technologies, which has moved to Denver from Palo Alto.
E-cigarette maker Juul Labs also moved to Washington from San Francisco, and Charles Schwab said its headquarters will move from San Francisco to Westlake, Texas.
Texas is already home to other technology companies such as Advanced Micro Devices (AMD) and Dell, among others.
Salesforce, one of San Francisco’s largest private employers, said this week it is downsizing its San Francisco office space for the third time amid the pandemic and now offers 40 percent of a 43-story building across the street from the main Salesforce tower. . .
But not every major tech company is cutting back.
Companies such as Autodesk, Google and Twilio have expanded their office space in San Francisco in recent years.