As we had long noted, it was the Geeks who were the first to fight the COVID War by ordering their employees not to come to work because they would get/spread the virus. Now, the Silicon Valley bonanza that they created with the dawn of the Internet Revolution has turned to dusk.
Confirming our 2020 office building bust that had forecast in 2020, Alphabet, Meta Platforms, and other Silicon Valley mainstays are abandoning office space at an accelerating pace, The Wall Street Journal reported.
Office vacancy rates in Palo Alto, San Jose, and Sunnyvale—the three towns at the heart of the fabled tech center—reached 17 percent this month, compared to 11 percent in 2019, according to data firm CoStar.
A record 7.6 million square feet are available to sublease in the three towns, nearly triple the 2.7 million in 2019, CoStar noted, including 700,000 recently offered by Meta.
The empty rate in nearby Menlo Park and Mountain View topped 20 percent this spring. In Mountain View and Moffett Park, Google just put another 1.3 million square feet up for sublease.
Along Menlo Park’s Sand Hill Road, home to many high-flying venture capital firms, empty space has more than tripled compared to four years ago, now sitting at 14 percent.
Andreesen Horowitz, a renowned investment firm, still holds its office space there but told the WSJ it operates “primarily virtually.”
A little north of Silicon Valley in San Francisco, vacancies have soared past 25 percent, triple their pre-COVID proportion.
The city’s rate is higher because a significant portion of its offices were taken by small firms, which canceled leases quickly when the tech economy slumped, the WSJ noted.
Amazon, Google, Lyft, and Salesforce are among the tech companies that require workers to be in the office at least some of the time.
However, that mandate is not enough to make use of the amount of square footage the companies needed previously.
Tech companies hired voraciously in 2020 and 2021 as consumers invested in tech while locked down at home.
However, the companies held onto their office space, assuming that workers would return once the COVID War was over.
As a result, Silicon Valley has one of the lowest rates of returning workers, according to security firm Kastle Systems, which tracks swipe card rates in more than 2,000 office buildings.
During the first week of this month, only 39 percent of workers in San Jose stopped by their central offices, the lowest rate among the 10 cities Kastle monitors. The average among the 10 was 50 percent.
TREND FORECAST: Again, when we had forecast a major commercial office building calamity in 2020 when politicians launched the COVID War, closed down businesses and made people work from home, it was ignored by the mainstream media and those in the office building sector. Now they are paying the price… a price that will also crash many of the small and medium size banks that hold the loans for which they will not be paid. And, as we note, buildings built in the past 50 years are non-convertible for housing units.
- “THE NEW LIFE OF LOCKDOWN” (19 May 2020)
- “REMOTE WORK = COMMERCIAL BUST” (2 Jun 2020)
- “SLIDING VALUE OF OFFICE SPACE HITS URBAN CENTERS” (11 Aug 2020)
- “WORK FROM HOME, CITY REAL ESTATE DOWN” (20 Oct 2020)
- “OFFICE WORKERS STAY HOME” (8 Dec 2020)
- “RETURN TO OFFICES POSTPONED: COMMERCIAL REAL ESTATE BUST?” (14 Sep 2021)
- “WORKERS STAYING HOME, COMMERCIAL REAL ESTATE DISASTER LOOMING” (19 Oct 2021)
- “COVID WAR KEEPING WORKERS OUT OF THE OFFICE” (16 Nov 2021)
- “NYC BUSINESSES: BYE, BYE NYC” (16 Nov 2021)
- “Commercial Real Estate in a Tailspin” (20 Oct 2020)
- “Deloitte Abandons More London Office Space” (26 Apr 2022)
- “GM Softens Back-to-the-Office Requirement After Worker Backlash” (4 Oct 2022)
- “Business Office Bust Begins to Bite” (20 Dec 2022)
- “New York City’s Workforce Sharply Shrinking” (24 Jan 2023)
- “Office Occupancy Half of What It Used to Be” (7 Feb 2023)
- “Plan to Turn New York’s Vacant Hotels to Housing Not Working” (5 Apr 2022)
- “Wall Street, Dead Street. Office Buildings Going Condo” (28 Jun 2022).
- “Office Building Bust” (3 Jan 2023)