Sleeping Bags in High Rises? ... Back in 1999, Po Bronson's hot book on Silicon Valley, The Nudist on the Late Shift, showed a picture of David Filo, co-founder of Yahoo, conked out at his cubicle in his sleeping bag. At the time, Filo's stock was worth about a billion dollars and the message was "In the New Economy, we like our jobs so much that we live where we work."

Now I'm thinking maybe Filo was just a few years ahead of his time. According to the San Francisco Chronicle, the city is beginning to convert downtown office buildings to residential projects. (Home Is Where the Office Was, May 4, 2003), "Future shoppers for homes may have the option of residing at the former Chevron headquarters on Market Street or the Bank of America building above the Powell Street cable car turnaround." That's because "The city is staring at a record 24 percent office vacancy rate with no source of jobs on the horizon to fill the space."

And listening to Reis's Quarterly Briefing yesterday didn't provide much comfort either. CEO Lloyd Lynford described the real estate industry as a prizefighter "standing but wobbly." The continued weak economy has so far reduced the number of jobs 2.1 million below the March 2001 peak, causing negative absorption of almost 144 million square feet of office space nationwide.

Effective rents are down 18.9% on average with San Francisco (-66%), San Jose (-63%) and Boston (-41%) leading the pack. Uh-oh. But there's hope. Lynford predicts that nationwide the vacancy rate will start to fall by yearend 2004.

--Peter Pike