The problem is particularly acute in Los Angeles and San Francisco

Monday, June 19th, 2023

A recent Boston Consulting Group survey found that many office buildings are at risk of becoming “zombies,” with low usage, high vacancy and quickly diminishing financial viability:

The problem is particularly acute in Los Angeles and San Francisco, where weekday office building use has fallen to around 40%. As a result, in both cities, public transit revenue has plummeted by 80% or more, and office property values and tax revenues may drop by as much as half, according to our analysis of public data.

Rising interest rates are compounding the financial pressure for building owners, whose rental income stands to drop 35% to 45% as corporate leases expire in both San Francisco and Los Angeles. Higher borrowing costs coupled with lower valuations could leave some owners owing more than their buildings are worth, leading in turn to a wave of defaults that suddenly make lenders the owners and managers of these buildings. In February, a fund managed by Brookfield Properties defaulted on $784 million in loans on two well-known office skyscrapers in downtown L.A., which was seen by some as a turning point for the U.S. office market.


  1. Pseudo-Chrysostom says:

    Email-jobs class realizing the office is pointless. (Not realizing their ‘work’ is pointless too.)

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