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San Francisco is facing its highest office vacancy rate since 1993. Commercial real estate firm CBRE said in a recent report that 27.1 million square feet of a total of 90 million square feet is currently vacant.

“The issue started with the pandemic,” said Colin Yasukochi, CBRE’s executive director at its Tech Insights Center. “Prior to the pandemic, in the city of San Francisco, our office vacancy rate was about 4%. Which meant that 4% of all the space, the millions and millions of square feet of space that we had in the city, were vacant. Today, that number is more like 26%.”

With remote work gaining popularity, the problem is only expected to worsen. San Francisco has been referred to as the work-from-home capital of the United States, with the American Community Survey finding that 46% of employees in San Francisco worked from home in 2021, up from 7% in 2019. 

To combat the rising number of office vacancies, one local legislator is pushing to convert empty office buildings into residential buildings. Matt Haney, a Democratic state Assembly member, says tackling the empty office problem could help the city take the much-needed steps it needs to address the housing crisis. 

“What we can’t do is just leave these buildings empty. That would be bad for our city’s downtown. It would be a total waste,” Haney said. “There are some obvious things that we can look at, where we can meet some of the other needs that we have and actually solve another problem that we have, and that’s our housing crisis.” 

Under the Housing Element, the state of California is mandating that San Francisco build 82,000 new units of housing, including affordable units meant for low-income residents, by 2031. In order to meet that goal, the city needs to build 10,000 units of housing per year starting next year. However, San Francisco Mayor London Breed believes that task is easier said than done due to the lack of support from local legislators. 

“It’s going to require that we make some major changes that I know our legislative body is not going to be open to,” Breed said. “But if they don’t, what’s going to happen? State support for affordable housing is going to be taken away. Tax credits and all the things that we enjoy to support the ability for us to build housing in the first place in San Francisco is going to be taken away.”

The latest CBRE report published in early December said that office vacancies reached a nearly 30-year high in the third quarter with a vacancy rate of 25.5%. And those rising vacancy rates are having a major impact on the city’s economy.

“We are facing an over $700 million budget deficit, mostly as a result to the challenges around our empty office spaces, as well as we’re seeing businesses closed in the financial district,” Breed said. 

CBRE data revealed that so far in 2022 there have been 42 office conversion completions in the U.S., but only 17% of those have been into multifamily homes, while 46% has been office-to-lab conversions. 

“The rents that you can get for a life sciences lab space are much higher than office space. So it makes that conversion financially viable,” said Yasukochi. “We have high demand for residential still, but not at the price that would be required for a developer to be able to do that from a financial perspective.” 

Under current market conditions, many developers lack incentives to build housing, and strict housing policies often mean developers go through lengthy processes that can turn a profitable project into one that loses money and time. 

However, in many cases developers are already at a point where they are investing in costly upgrades. Office conversion typically takes place in older, Class C buildings in need of major repair and remodeling and often in unfavorable locations. While an office-to-residential conversion may require the stripping of a building, in most cases it’s still much cheaper than building from the ground up.

“The most important thing from a developer standpoint is what makes the most financial sense,” said Marc Babsin, president of Emerald Fund, a real estate development company that completed one of the largest office-to-residential conversions in the city at 100 Van Ness Ave. 

“There’s a lot of things that are standing in the way of converting office to residential. The biggest one being that the numbers aren’t working today because construction costs are so high. There are things that the government could do to make it easier,” Babsin said. 

The San Francisco mayor said the problem is that it takes a long time to build housing, especially given all the requirements.

“We have so many laws on the books already in terms of height limitations, in terms of open space, in terms of number of units, in terms of everything that you have to do to build,” Breed said. “And then on top of that, we make people go through an insane process which takes an extremely long time.”

While office-to-residential conversion is seen as a step in the right direction to address San Francisco’s housing crisis, it is years away from being a solution. Breed says the city needs to build more housing in any manner. 

“We just need all housing,” she said. “You know affordable housing sounds good, but when you go through the process to try and get access to affordable housing in this city, it is hard and it is really, really challenging. And the system that we have tried to repair under state and federal law has been very, very difficult to work under. And so as far as I’m concerned, we need to be as aggressive as we can to get more housing built.”

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Week in review: The Nasdaq’s worst week since April, three trades, and earnings

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Week in review: The Nasdaq's worst week since April, three trades, and earnings

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Too early to bet against AI trade, State Street suggests 

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Too early to bet against AI trade, State Street suggests 

Momentum and private assets: The trends driving ETFs to record inflows

State Street is reiterating its bullish stance on the artificial intelligence trade despite the Nasdaq’s worst week since April.

Chief Business Officer Anna Paglia said momentum stocks still have legs because investors are reluctant to step away from the growth story that’s driven gains all year.

“How would you not want to participate in the growth of AI technology? Everybody has been waiting for the cycle to change from growth to value. I don’t think it’s happening just yet because of the momentum,” Paglia told CNBC’s “ETF Edge” earlier this week. “I don’t think the rebalancing trade is going to happen until we see a signal from the market indicating a slowdown in these big trends.”

Paglia, who has spent 25 years in the exchange-traded funds industry, sees a higher likelihood that the space will cool off early next year.

“There will be much more focus about the diversification,” she said.

Her firm manages several ETFs with exposure to the technology sector, including the SPDR NYSE Technology ETF, which has gained 38% so far this year as of Friday’s close.

The fund, however, pulled back more than 4% over the past week as investors took profits in AI-linked names. The fund’s second top holding as of Friday’s close is Palantir Technologies, according to State Street’s website. Its stock tumbled more than 11% this week after the company’s earnings report on Monday.

Despite the decline, Paglia reaffirmed her bullish tech view in a statement to CNBC later in the week.

Meanwhile, Todd Rosenbluth suggests a rotation is already starting to grip the market. He points to a renewed appetite for health-care stocks.

“The Health Care Select Sector SPDR Fund… which has been out of favor for much of the year, started a return to favor in October,” the firm’s head of research said in the same interview. “Health care tends to be a more defensive sector, so we’re watching to see if people continue to gravitate towards that as a way of diversifying away from some of those sectors like technology.”

The Health Care Select Sector SPDR Fund, which has been underperforming technology sector this year, is up 5% since Oct. 1. It was also the second-best performing S&P 500 group this week.

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People with ADHD, autism, dyslexia say AI agents are helping them succeed at work

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People with ADHD, autism, dyslexia say AI agents are helping them succeed at work

Neurodiverse professionals may see unique benefits from artificial intelligence tools and agents, research suggests. With AI agent creation booming in 2025, people with conditions like ADHD, autism, dyslexia and more report a more level playing field in the workplace thanks to generative AI.

A recent study from the UK’s Department for Business and Trade found that neurodiverse workers were 25% more satisfied with AI assistants and were more likely to recommend the tool than neurotypical respondents.

“Standing up and walking around during a meeting means that I’m not taking notes, but now AI can come in and synthesize the entire meeting into a transcript and pick out the top-level themes,” said Tara DeZao, senior director of product marketing at enterprise low-code platform provider Pega. DeZao, who was diagnosed with ADHD as an adult, has combination-type ADHD, which includes both inattentive symptoms (time management and executive function issues) and hyperactive symptoms (increased movement).

“I’ve white-knuckled my way through the business world,” DeZao said. “But these tools help so much.”

AI tools in the workplace run the gamut and can have hyper-specific use cases, but solutions like note takers, schedule assistants and in-house communication support are common. Generative AI happens to be particularly adept at skills like communication, time management and executive functioning, creating a built-in benefit for neurodiverse workers who’ve previously had to find ways to fit in among a work culture not built with them in mind.

Because of the skills that neurodiverse individuals can bring to the workplace — hyperfocus, creativity, empathy and niche expertise, just to name a few — some research suggests that organizations prioritizing inclusivity in this space generate nearly one-fifth higher revenue.

AI ethics and neurodiverse workers

“Investing in ethical guardrails, like those that protect and aid neurodivergent workers, is not just the right thing to do,” said Kristi Boyd, an AI specialist with the SAS data ethics practice. “It’s a smart way to make good on your organization’s AI investments.”

Boyd referred to an SAS study which found that companies investing the most in AI governance and guardrails were 1.6 times more likely to see at least double ROI on their AI investments. But Boyd highlighted three risks that companies should be aware of when implementing AI tools with neurodiverse and other individuals in mind: competing needs, unconscious bias and inappropriate disclosure.

“Different neurodiverse conditions may have conflicting needs,” Boyd said. For example, while people with dyslexia may benefit from document readers, people with bipolar disorder or other mental health neurodivergences may benefit from AI-supported scheduling to make the most of productive periods. “By acknowledging these tensions upfront, organizations can create layered accommodations or offer choice-based frameworks that balance competing needs while promoting equity and inclusion,” she explained.

Regarding AI’s unconscious biases, algorithms can (and have been) unintentionally taught to associate neurodivergence with danger, disease or negativity, as outlined in Duke University research. And even today, neurodiversity can still be met with workplace discrimination, making it important for companies to provide safe ways to use these tools without having to unwillingly publicize any individual worker diagnosis.

‘Like somebody turned on the light’

As businesses take accountability for the impact of AI tools in the workplace, Boyd says it’s important to remember to include diverse voices at all stages, implement regular audits and establish safe ways for employees to anonymously report issues.

The work to make AI deployment more equitable, including for neurodivergent people, is just getting started. The nonprofit Humane Intelligence, which focuses on deploying AI for social good, released in early October its Bias Bounty Challenge, where participants can identify biases with the goal of building “more inclusive communication platforms — especially for users with cognitive differences, sensory sensitivities or alternative communication styles.”

For example, emotion AI (when AI identifies human emotions) can help people with difficulty identifying emotions make sense of their meeting partners on video conferencing platforms like Zoom. Still, this technology requires careful attention to bias by ensuring AI agents recognize diverse communication patterns fairly and accurately, rather than embedding harmful assumptions.

DeZao said her ADHD diagnosis felt like “somebody turned on the light in a very, very dark room.”

“One of the most difficult pieces of our hyper-connected, fast world is that we’re all expected to multitask. With my form of ADHD, it’s almost impossible to multitask,” she said.

DeZao says one of AI’s most helpful features is its ability to receive instructions and do its work while the human employee can remain focused on the task at hand. “If I’m working on something and then a new request comes in over Slack or Teams, it just completely knocks me off my thought process,” she said. “Being able to take that request and then outsource it real quick and have it worked on while I continue to work [on my original task] has been a godsend.”

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