Three-quarters of the execs surveyed by KPMG, all of whom are at the vice president level or higher, said they would expand their offices in San Francisco as they push for more in-person work and grow headcount.
Nearly 80% of the respondents said they are aiming to bring employees back to the office more frequently, and 66% said they plan to increase headcount this year, the San Francisco Business Times reported.
KPMG said that 91% of the surveyed business leaders expressed “high levels of confidence” in San Francisco’s growth prospects.
While the survey did not ask the execs for specific estimates of how much they expect their office space to grow, the results are a solid sign that the downsizing trend that has prevailed in the city for the past three years will wane as an office recovery grows in a market that saw vacancies peak at 37% last year.
The prevailing trend in San Francisco has seen large companies relocate to smaller spaces or renew only a fraction of their original space. KPMG itself is in the process of downsizing its office footprint, relocating next year from its 138K SF space at 55 Second Street to 505 Howard Street, where it will be leasing about 100K SF.
San Francisco-based Lyft inked a deal In December to extend its headquarters lease for 170K SF at 185 Berry Street for another decade, about half the 335K SF space the ride-hailing giant occupied at the two-building complex beginning in 2016.
Lyft listed 165K SF of the Berry St. complex for sublease in 2022. That portion of the original lease, set to expire in August 2025, has been dropped from the lease in the “blend and extend” deal Lyft signed in December.
A growing number of return-to-office mandates and the boom in generative AI, which has been driving office leasing in San Francisco, have office landlords hoping that right-sizing for tenants in 2025 will mean expansion instead of contraction.
It is not certain how quickly municipal workers will be returning to their offices in the San Francisco. The new mayor, Daniel Lurie, told CNBC that the city’s recovery “starts with City Hall going back to work five days a week.”
“We want to send a signal and role model for the private enterprises that we’d like them to come back five days a week as well,” Lurie said.
However, union contracts with city workers that run until 2027 include a two-day-per-week remote telecommuting policy. The city is the second-largest employer in San Francisco, with about 34,000 workers.
In July, Salesforce, the city’s largest employer, directed most of its employees to return to the office four to five days per week, starting on Oct. 1, 2024.
The July mandate came two years after Salesforce embraced a hybrid work policy allowing its workers in San Francisco to work remotely up to four days per week. In July 2022, the company listed for sublease 412K SF of the 43-story Salesforce West tower on Fremont St.
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