by Wolf Richter, Wolf Street:
Office occupancy plunged by the most in Dallas. In San Francisco, where it had already been rock-bottom, it dipped into the single digits.
The second wave of the Pandemic is scrambling whatever efforts had been under way to bring workers back to the office. Companies are back-tracking, and cities are once again trying to keep office workers – those that were still or again going to the office – from going to the office.
TRUTH LIVES on at https://sgtreport.tv/
Office occupancy fell broadly in the week through November 25, compared to the prior week, but the steepest deterioration was in the metros of Dallas, Houston, and Austin, where office occupancy had previously recovered the most. In the 10 largest metros, office occupancy plunged by 8.1 percentage points from the prior week, to just 17.6% of pre-Pandemic occupancy levels, the lowest since May 6, according to Kastle Systems, whose electronic access systems are installed in thousands of office buildings around the country. In other words, office occupancy as measured by people entering offices is down by 82.4% in those 10 cities compared to pre-Pandemic levels:
This data is not primarily a measure of employment – though it also captures layoffs – but a measure of the impact of work-from-home on office occupancy. For example, instead of 1,000 people working in a particular office building as they did before the Pandemic, fewer than 200 people might be working in that building now, with the remainder working remotely and a few having gotten laid off.
Kastle’s “Back to Work Barometer” for the 10 largest metros – the chart below – tracks in percentage terms how daily office occupancy has developed since before the Pandemic. The green lines depict the metros with the highest office occupancy rates.
The office occupancy rate in Dallas had been over 40% in recent weeks, meaning that occupancy was still down by nearly 60% from pre-Pandemic levels, but that was the best of the 10 metros. It’s at the top metros – Dallas, Houston, and Austin – where the occupancy rates have plunged by the most in the week through November 25 from the prior week, with the occupancy rate in Dallas plunging by over one-third, from 40.3% in the prior week, to 24.2% in the week through November 25 (chart via Kastle Systems, click to enlarge):
The list below shows the office occupancy levels for these 10 metros as a percentage of their pre-Pandemic level in the week ended November 25 (3rd column). It also shows the percentage-point drop from the prior week (4th column) and the occupancy level in the prior week ended November 18. The list is in order of the biggest percentage-point drops (4th column):
|Occupancy % of pre-Pandemic Level|
|Metro||Week, Nov 25||Point Drop||Week, Nov 18|
The San Francisco metro’s office occupancy rate has now dropped into the single-digits (9.9%). Back in August, when Kastle’s office occupancy rate for the metro was still a whopping 13.6%, I took a walk through San Francisco’s Financial District during morning rush hour to document the spookiness of it all, and I posted the photos: Haunting Photos of San Francisco’s Desolate Financial District During Morning “Rush Hour”: Visual Effects of Work-from-Home.
Now San Francisco’s Financial District has died down further. This is tragic for the small businesses in the ground-level spaces, the restaurants and cafés, the gyms, barbershops and hair salons and retailers. Customers have evaporated. Many of these businesses have thrown in the towel. Landlords are in a holding pattern. It doesn’t even make sense to put up a vacancy sign.
At the edge of San Francisco’s Financial District is the Embarcadero Center – five office towers, two hotels, and a shopping center that once had over 125 stores and restaurants, a gym, and some movie theaters. The shopping center is essentially dead and the movie theaters remain “closed till further notice.”