Elon Musk announced in July that X, formerly known as Twitter, would be relocating its headquarters from Market Street in San Francisco to Texas, marking a significant emblem of the tech exodus from the Bay Area. As a result, Moody’s has downgraded San Francisco’s top credit rating for the first time in 11 years, a decision influenced by a number of factors, including the departure of tech companies, high office vacancy rates, declining commercial real estate values, and a sluggish economic recovery post-pandemic.
According to the San Francisco Chronicle, San Francisco had maintained top-tier ratings from all three major credit rating agencies, but this week, Moody’s lowered the city’s rating from Aaa to Aa1. In its downgrade announcement, Moody’s pointed to the pandemic’s impact, which led to many tech workers not returning to the office. This, in turn, triggered an economic downturn in San Francisco, leading to a slow commercial real estate market, plummeting rental prices for office spaces, and persistently high vacancy rates.
However, two other rating agencies, S&P Global Ratings and Fitch Ratings, continue to grant San Francisco the highest credit rating of AAA for now. When the Chronicle reached out to Moody’s for comment, no response was received.
Jeff Cretan, communications director for San Francisco Mayor London Breed, subsequently issued a written statement highlighting that the city’s credit rating remains one of the best among major urban areas in the nation. He also noted that Fitch confirmed on October 8 that San Francisco still holds its AAA status.
Cretan further emphasized that both Moody’s and Fitch acknowledged the city’s strong fiscal management and robust revenue sources, though Moody’s expressed stronger negative sentiments regarding the economic impact of remote work for tech employees.
