S
an Francisco's office vacancy rate remains high, standing at 36.9% as of the third quarter. Despite a gradual recovery, experts expect the rate to peak next year due to ongoing challenges in key industries like tech and construction. According to Ted Egan, chief economist for San Francisco, rising interest rates have disproportionately affected these sectors, hindering the city's economic rebound.

    However, there are signs of optimism. Tech companies, particularly artificial intelligence startups, are driving demand for office space in San Francisco and Silicon Valley. Since 2019, AI firms have absorbed over 3.9 million square feet in San Francisco, with this year expected to see the highest leasing activity from tech companies in five years.

    Companies like Finix, a fintech company led by CEO Richie Serna, are actively seeking new offices despite facing challenges in Downtown San Francisco. While acknowledging the area's struggles, Serna remains bullish on the city's future and notes that his company requires employees to work four days a week in the office to foster collaboration and innovation.

    The return-to-office trend is expected to help revitalize Downtown buildings, with major tech giants like Amazon.com and Salesforce implementing similar policies. Additionally, the passage of Prop. 36 and the election of new mayor Daniel Lurie may help improve public safety and the overall business environment in San Francisco.