Tech giant Microsoft has joined San Francisco’s “tech-xodus,” offering up to 49,000 square feet of its offices for sublease as the city enters a “doom loop.”
Microsoft is just the latest company to reduce its presence in the city, with both Meta and LinkedIn subletting their space in recent months.
The office vacancy rate hit a record 34 percent in September as rising crime pushes businesses out of the city center and economists warn the city is entering an “urban doom loop.”
Microsoft’s move follows continued cost-cutting across the industry, leading to mass layoffs and more people working from home.
Now the tech giant is offering space in San Francisco’s tallest tower – 555 California Street – ranging from 4,500 to 49,000 square feet for rent until May 2029.
In front of the Microsoft headquarters office in San Francisco, in the Financial District of San Francisco
The Microsoft office at 555 California Street, where offices with up to 49,000 square feet of space are available for rent
A file photo shows people sleeping, discarded clothing and used needles in San Francisco
A file photo shows homeless encampments along a street in San Francisco
The 779-foot-tall building is owned by former President Donald Trump and Vornado Realty Trust and was 94.5 percent leased as of July at $120 per square foot per year.
San Francisco, long popular with tech companies, has been hit hard by the pandemic due to its high density of office space.
Chris Roeder, managing director of Jones Lang LeSalle in San Francisco, told Al Jazeera: “Almost 80 percent of the space in downtown San Francisco is office space, unlike New York or most other cities where there is more housing.”
That means businesses are losing customers as more people work from home and offices close, leaving parts of the city empty and vulnerable to crime.
According to a recent report, 95 retailers in downtown San Francisco have closed since the start of the COVID pandemic, a decline of more than 50 percent from 2019.
Joe Eskenazi, editor-in-chief of Mission Local, a nonprofit news site based in San Francisco, said in a CNN interview, “The difference now is that with fewer people downtown, a higher percentage is visibly homeless.”
The city has also struggled with rampant fentanyl use and fatal overdoses — there were nearly 346 overdose deaths in the city in the first five months of 2023 — an increase of more than 40 percent over the same period in 2022.
A map shows the major companies that have left or are planning to leave San Francisco in recent months
An analysis of official figures and other research shows San Francisco could lose hundreds of millions of dollars due to business exodus and failure to recover from Covid
The eviction of offices and stores has also caused the city’s revenue to decline, making it harder to combat the problem.
In March, the city said its budget deficit for the year rose to $290 million, more than $90 million than expected.
The situation is so dire that a San Francisco official organized a “Doom Loop Walking Tour” of the city, offering people the chance to “witness firsthand the doom and misery of downtown San Francisco” for $30.
He was then forced to resign.
Microsoft is following in the footsteps of other tech giants that are reducing their presence in the city.
Earlier this month, LinkedIn made the top five floors of its 650,000-square-foot, 26-story building available for lease through December 2027 and laid off 668 employees.
A few months earlier, Meta announced that it was ready to vacate its 435,000-square-foot building in San Francisco once its lease expires in 2031.
Companies like Airbnb, Paypal, Slack, Lyft and Salesforce have also left tens of thousands of square feet of buildings in the city in the past year.
Microsoft did not immediately respond to a request for comment.