Elon Musk predicts one of San Francisco’s problems will get worse

The Covid-19 pandemic has been a boon for tech companies.

The global economy went online overnight. From groceries to medical advice to the arts, the economy is becoming technology-driven.

As such, the pandemic has allowed technology to become the engine of our daily lives sooner than expected. One of the big changes that comes with technology during the pandemic is how we work.

Remote work has established itself as the new organization of work. Regardless of the activity, working remotely has become the norm and the restaurant industry, for example, has been forced to develop home delivery. brought benefits to

As the economy reopened, many of the habits born during the pandemic have taken hold in our daily lives, and in the tech companies themselves. This is for remote work. Many employees no longer want to return to the office, they explain. Because the pandemic has shown that working from home is just as effective. So why change, they seem to ask.

work remotely

Fearing that their corporate culture would disappear, many companies tried various methods to revive their employees, but to no avail.apple (AAPL)- Get Free ReportGoogle (Google)- Get Free Report and meta platform (meta)- Get Free Report I had to postpone my return to the office several times.

Some companies have adopted a hybrid system consisting of a minimum number of days in the office. But even this arrangement isn’t enough to get employees back in the office.

But what once seemed like a problem for businesses is now ultimately proving to be a boon. recession is expected. Faced with slowing growth, many tech companies have begun cutting costs drastically to protect their profits. Not only are they cutting thousands of jobs, they are also closing their offices.

recent sales force (CRM)- Get Free ReportThe company, whose tower is one of San Francisco’s most recognizable symbols, announced on January 4th a major restructuring plan that includes major job cuts, a reduction in office space, and exiting some of the real estate market.

Not surprisingly, San Francisco is one of the cities most affected by the phenomenon of empty offices.

San Francisco’s office vacancy rate rose from 28.9% in the third quarter to a record high of 32.1% in the fourth quarter, according to a Savills report. This means that almost a third of office space in the city is currently empty. Subleased space availability increased to 8.2M SF from 7.7M SF in the third quarter.

“Permanent uncertainty for the economy, widespread adoption of hybrid workplaces, a slow return to office use, and ongoing fix In the technology sector, lower demand for office space could become the new normal going into 2023,” the report said.

“As a result, we expect the highly tenant-friendly office market conditions to continue for the foreseeable future as record high availability levels are projected to continue increasing even as local employers seek to move employees back into their offices. will be [this] Year. “

“It will go down”

Elon Musk, the new owner of Twitter, now headquartered in San Francisco, thinks things could get even worse. It started with a message that

Sachs, who is also a friend of Mr. Musk, posted on January 8, “Just got office space in San Francisco (SOMA) at the same price as in 2009. So good.”

“It will go down,” Musk commented.

Musk has yet to say if Twitter will leave San Francisco, but given this tweet and other statements he’s already made about San Francisco, it’s unlikely the platform will leave California in the coming months. No surprise.

Additionally, Twitter landlord Columbia Reit- 650 California LLC said it notified the platform in late December that the company was behind on rent. The New York Times reported on Dec. 13 that Twitter has not paid rent for its offices around the world and its San Francisco office for several weeks.

Mr. Musk moved Tesla (TSLA)- Get Free Report From California to Texas in 2021.

Technology has helped make remote work the norm. Tech cities are suffering now.