Microsoft to vacate 50,000 square feet of office space in San Francisco as tech-xodus continues amid drug and crime ‘doom loop’

Technology giant Microsoft has joined San Francisco’s ‘tech xodus’, advertising up to 500,000 square feet of its offices for sublease as the city enters a ‘doom loop’.

Microsoft is just the latest company to scale back its presence in the city, with Meta and LinkedIn subletting their spaces in recent months.

Office vacancy rates hit a record high of 34 percent in September as increased crime pushes shops out of the city center and economists warn the city is entering an “urban doom loop.”

Microsoft’s move follows continued cost cuts across the industry, with mass layoffs and more people working from home.

Now the tech giant is offering spaces in San Francisco’s tallest tower – 555 California Street – ranging from 4,500 to 49,000 square feet for lease until May 2029.

The Microsoft office at 555 California Street, where offices up to 49,000 square feet are available for lease

Sleeping people, discarded clothes and used needles are seen in San Francisco in a file photo

Homeless camps are shown in a file photo along a street in San Francisco

The 750-foot building is owned by former President Donald Trump and the Vornado Realty Trust and was 94.5 percent leased as of July at a cost of $120 per square foot per year.

San Francisco – long popular with tech companies – was hit hard by the pandemic, thanks to its high density of office space.

Chris Roeder, executive 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, which have more residential .’

This means that as more people work from home and offices close, businesses lose their customs and parts of the city remain empty and prone to crime.

A recent report found that 95 retailers in downtown San Francisco have closed their doors since the start of the COVID pandemic, a drop of more than 50 percent from 2019.

Joe Eskenazi, editor-in-chief of Mission Local, a San Francisco-based nonprofit news site, said in a CNN interview, “The difference now is that with fewer people downtown, a higher percentage are visibly homeless.”

The city has also struggled with rampant fentanyl use and fatal overdoses – in the first five months of 2023, there were nearly 346 overdose deaths in the city – an increase of more than 40 percent from 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 that San Francisco could lose hundreds of millions of dollars due to an exodus of businesses and the inability to recover from Covid-19.

The emptying of offices and shops has also led to a decline in the city’s revenues, making it more difficult to combat the problem.

In March, the city announced that its budget deficit for the year had risen to $290 million, more than $90 million than expected.

The situation is so bad that a San Francisco official organized a “Doom Loop Walking Tour” of the city for $30, giving people the chance to “get up close and personal with the doom and misery of downtown San Francisco.” .

He was subsequently forced to resign.

Microsoft is following in the footsteps of other tech giants who are reducing their presence in the city.

Earlier this month, LinkedIn put the top five floors of the 60,000-square-foot, 26-story building up for lease until December 2027 and laid off 668 employees.

A few months earlier, Meta announced it was prepared to vacate its 40,000-square-foot building in San Francisco once its lease expired 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.