San Francisco Mayor Admits City Has To Adjust To Remote Working Reality

Mayor of San Francisco admits her city needs to adjust to new reality that many workers will not return to working in an office

The mayor of San Francisco has denied there has been an ‘exodus’ from her city, but admits a large change is impacting local businesses.

Speaking to CNBC’s “The News with Shepard Smith last Friday, San Francisco Mayor London Breed said her city will have to adjust to the new reality that many workers aren’t coming back to the office.

Remote and home working became the norm for millions of workers around the world during the Covid-19 pandemic. And many workers are opting not to return to the office, but instead continue working from home, or adopt a hybrid working pattern.

City exodus?

The San Francisco Bay area is home to many big name tech firms, and the city itself took a $400 million hit to its tax revenues in 2021, as businesses moved to other cities and shifted to remote working, CNBC reported.

Mayor London Breed acknowledged that tech workers have been slower to return to physical spaces in San Francisco than in other major cities.

“I wouldn’t call this an exodus. I would call it a change,” Breed said. “We’ve experienced a global pandemic. People have been working from home. And I think that most employees want some level of work from home as they returned to the office. And a lot of employers are providing that as an option.”

According to CNBC, the office vacancy rate in San Francisco rose to 24.2 percent in the second quarter from 23.8 percent in the prior period, according to CBRE research.

Mayor Breed’s office estimates that one-third of San Francisco’s workforce is now remote and outside of the city.

Last year, that resulted in a $400 million hit to tax revenue, according to San Francisco’s Office of the Controller.

“Of course I’m worried about the trend, but again, you know, this was a global pandemic where life has changed,” Breed said.

California losses

San Francisco and indeed the US state of California, is also having to contend with big name tech firms relocating to other US states.

Elon Musk has repeatedly warned about California’s ‘overtaxation’ and ‘overegulation’ and ‘overlitigation’ as reasons for companies relocating away to other states such as Texas or Florida.

In December 2020, Musk announced he had personally left California after he had sold his Bel Air homes.

Musk personally relocated to Texas, after living in Los Angeles for 20 years.

Then in October 2021 he followed through on his warning, after clashing repeatedly with Californian officials last year, and also moved Tesla’s corporate headquarters to Texas.

Other tech giants such as Oracle moved its corporate headquarters from California, and relocate it to Texas.

Hewlett-Packard Enterprise (HPE), one of the founding fathers of California’s tech homeland of Silicon Valley, also revealed it was leaving the ‘golden state’ and moving its headquarters to Texas.

A number of other firms have already left the San Francisco Bay Area, including data-mining provider Palantir Technologies, which moved to Denver from Palo Alto.

E-cigarette maker Juul Labs also relocated to Washington from San Francisco, and Charles Schwab said its headquarters will move from San Francisco to Westlake, Texas.

Texas is already home for other tech firms such as Advanced Micro Devices (AMD), and Dell, among others.

Some staying

Salesforce, one of San Francisco’s largest private employer, said this week it is cutting its San Francisco office space for the third time during the pandemic, and is now listing 40 percent of a 43-story building that’s across the street from the main Salesforce Tower.

But, not every major tech firm is cutting back.

Firms such as Autodesk, Google and Twilio have expanded their office space in San Francisco in recent years.