SF's AI boom can't stop real estate slide, as office vacancies reach new record

Commercial Real Estate Bets & How to Short It

• Some commenters say pre-COVID bets against commercial real estate, driven by work-from-home (WFH) expectations, are paying off.
• Suggested retail strategies: shorting commercial REITs, buying put options, or using inverse ETFs, with caveats about risk, timing, and being “late” to the trade.
• Explanation of “long” vs “short” positions appears, including asymmetric risk: long can lose at most the investment, short can have theoretically unlimited losses.

Office Rents, Landlords, and Rent-Seeking

• Many feel SF office rents (e.g., ~$68/sqft/year) remain far too high despite rising vacancies.
• Descriptions of small, poor-quality spaces renting for thousands per month.
• Critique that “maximum sustainable rent” leads to “minimum sustainable product” for consumers; landlords are characterized as pure rent-seekers in some comments.
• Debate over what a “reasonable” rent (e.g., $10/sqft/year base + triple-net costs) should be and how much of it is simply “what the market will bear.”

AI Boom vs WFH and Office Demand

• Consensus that AI-related office leasing is marginal relative to the scale of the overall commercial market.
• Several note AI firms are few and VC-funded; they can’t offset broad pullbacks in space usage.
• WFH is seen as the major driver of vacancy, independent of whether AI “works.”

City Conditions, Crime, and Transit

• Strong criticism of SF’s livability: homelessness, open drug use, property crime (especially car break-ins), trash, and high commuting costs.
• Disagreement on how much these factors drive office vacancies: some argue they’re central; others point to cities like Vancouver with similar social issues but much lower office vacancy.
• Long, contentious subthread on crime policy: “broken windows” and stop-and-frisk are debated as effective but morally questionable vs necessary for safety.
• Transit: Muni seen as cheap but slow and sometimes unsafe; BART/Caltrain viewed as expensive commuters’ burden, with funding crises and safety concerns.

Urban Form, Housing, and Repurposing Offices

• Some argue dense downtowns are increasingly obsolete given remote work, logistics, and tech; advocate more dispersed, semi-autonomous communities.
• Others counter that density is environmentally and socially preferable to sprawl.
• Ideas include converting offices to housing or other non-traditional uses, though technical and economic challenges are acknowledged.

Office vs Home: Worker Preferences

• Managers and some developers value offices for collaboration, energy, and separation of space, especially with short commutes.
• Many coders prefer home for quiet and zero commute; some would require large salary premiums to return to offices full-time.