How Fast Can a “Shortage” of Office Space Turn into a “Glut?” San Francisco Shows How Fast

by Wolf Richter
Wolf Street

Commercial real estate is in turmoil, but San Francisco’s glut is dwarfed by the fiascos in Houston and Calgary.

During the Good Times, when there was still a “shortage” of office space in hot markets, such as in San Francisco, companies resorted to warehousing of office space. They leased office space they didn’t need, and wouldn’t need for years, because they didn’t want their expected growth, and the expected growth in staffing, to be crimped by the shortage of office space.

They grabbed all available office space and leased it long-term, expecting to grow into the space in future years, thereby creating an artificial shortage.

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