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City economists warn office vacancy could cost San Francisco $100M–$200M in property tax over five years
Summary
Controller’s office presented models showing downtown office vacancies and rising capitalization rates could reduce property‑tax receipts by roughly $80–$150M by 2026 and possibly $100–$200M by 2028; assessor, appeals board and stakeholders urged continued monitoring and policy consideration.
San Francisco city economists and tax officials told the Budget & Finance Committee on Nov. 16 that sustained downtown office vacancy and weaker office income could materially reduce property‑tax revenue and other city receipts over the next five years.
Ted Egan, chief economist in the Controller’s Office, summarized national survey data and market forecasts showing that post‑pandemic work‑from‑home has settled at roughly two to three days per week on average, and that San Francisco’s return‑to‑office rate (~41%) lags many peer metros. Egan said the market is shifting from sublease‑led vacancy to direct vacancy — meaning building owners are receiving less income — and coupled with rising interest rates and higher capitalization rates, that can push down market values and…
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