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Avison Young experts provide insight on Bay Area trends this year; AI sector will drive the market; fewer layoffs; increase in return-to-office

Avison Young experts provide insight on Bay Area trends this year; AI sector will drive the market; fewer layoffs; increase in return-to-office February 21, 2024

The AI Industry is the Top Bay Area Market Driver

The team holds the belief that AI will emerge as the predominant growth industry following this downturn, maintaining momentum for the foreseeable future.

Additionally, other industries exerting a positive influence on the market include industrial manufacturing, clean tech, sustainable energy and biotech.

“AI companies accounted for 31% of total deals completed in San Francisco in 2023 which has given the city a much needed shot in the arm,” observed John Cashin, a Principal in Avison Young’s San Francisco office. “We are expecting more of the same in 2024 with in excess of 350,000 sf of demand from AI companies. San Francisco will always have a leg up on other parts of the country because of the talent pool along with access to venture capital.”


The Pace of Layoffs is Decreasing

More than half of Avison Young brokers predict that less than 25% of companies will conduct additional layoffs in 2024. Nevertheless, the technology sector might witness more workforce reductions as companies undergo restructuring following a surge in hiring post-pandemic. Investor decisions and return on investments are heavily influenced by factors such as the stock market and interest rates.

This prediction is likely on target based on current market data. Despite job postings remaining below pre-pandemic levels, the Bay Area experienced a notable turnaround in January 2024, with office job postings seeing a 35% improvement compared to December 2023, which marked the lowest point in the pandemic.  Although January's numbers still fall just over half of the average monthly figure observed in 2018 to 2019, this uptick may indicate early signs of recovery,

“While some Bay Area tech companies initiated layoffs at the start of the year, overall job reduction numbers have notably decreased from the peak levels observed in late 2022 and the first half of 2023, as evidenced by California's Worker Adjustment and Retraining Notification (WARN) reports,” noted Howard Huang, Avison Young Market Intelligence Analyst. “With interest rates showing signs of stabilization, there is cautious optimism for a potential labor market recovery in the Bay Area this year.”


Return to Office is Trending

As employers throughout the Bay Area systematically reevaluate the productivity of remote work, the Avison Young market experts estimate that more than a quarter to half of all Bay Area companies will mandate a return to the office.

According to prevailing sentiments within the Avison Young team, a significant majority of 65% anticipates that over half of all employees will return to the office for at least three days a week, a trend expected to gradually drive-up occupancy in buildings.

“As a whole we are seeing more people on the streets, on public transit and the highways which is always a good indication that the market is active,” said Dina Gouveia, West Region Manager of Market Intelligence with Avison Young.

About Avison Young

Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, our clients collaborate with an empowered partner who is invested in their success. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.

Avison Young is a 2023 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for 12 consecutive years.


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Darcie Giacchetto, Media Relations & Content Specialist – Southwest: +1.949.278.6224