The fiscal toll of the pandemic is only beginning to reveal itself. The challenges presented to growing office vacancy rates are not unique to San Francisco.
A new analysis published by the office of San Francisco Chief Economist Ted Egan estimates the property tax revenue risk of ongoing office vacancies in the city at $200 million by 2028.
Romy Varghese shares news of the analysis for Bloomberg, explaining that office vacancies in the traditional tech hub could rise to as much as 31 percent in the fourth quarter of next year. According to an October article on Socketsite, San Francisco reached 23 percent office vacancies in the second quarter of 2022.
“Commercial property values would fall, and that would mean less revenue for the city from property taxes. In the short-term, the risk is lessened by long-term leases and the fact that under a California law known as Proposition 13, valuations for property tax purposes are often well below market prices. That cushions municipalities during downturns,” writes Varghese.
The office sector is responsible for 18 percent of the city’s revenues, according to Bloomberg.
San Francisco has emerged as the poster child of cities faced with the fiscal consequences of new work from home trends in the wake of the Covid-19 pandemic, but it’s not the only city faced with similar concerns in the United States, though the office vacancy equation varies by the location.
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UCLA Lewis Center for Regional Policy Studies
Mpact (formerly Rail~Volution)
Chaddick Institute at DePaul University
City of Piedmont, CA
Great Falls Development Authority, Inc.
HUDs Office of Policy Development and Research