Office vacancies in San Francisco hit a record high rate in the second quarter as businesses flee the crime-ridden city.
The vacancy rate hit 31.8 percent in this year's second quarter, which continues a three-year trend of the market's downturn. In the last three months alone, 1.9 million square feet of office space was added to the market, the San Francisco Chronicle reported.
Among the companies trying to ditch their office space in the struggling city this quarter were Uber, Airbnb, and Salesforce.
It's the latest statistic highlighting the decline of the California city. Homicides in San Francisco have increased nearly 40 percent from 2020 to 2022 and deaths from fentanyl have spiked.
Businesses that once occupied commercial space across the city have left. Old Navy announced in May it will close its flagship store. Whole Foods and Nordstrom have shuttered businesses in the city over safety concerns. The latter's exit is costing the city 380 jobs. The downtown area of the city has lost half of its businesses since the start of the pandemic.
Hotels across the city are also closing as they fail to recover like others have in comparable markets. Revenue per available room was 23 percent lower in April than during the same time in 2019, while hotels in New York City and Los Angeles are exceeding their 2019 metrics, the Wall Street Journal reported.
The owner of the city's largest hotel, the Hilton San Francisco Union Square, and its fourth-largest, Parc 55, said it ceased payments on $725 million worth of loans and entered foreclosure because the city is facing "major challenges."
Huntington Hotel and the Yotel San Francisco hotel were both sold after facing foreclosure in recent months. The number of hotel closures may soon rise as more than 20 locations will face loans due in the next two years, the Journal reported.