OPINION: The pandemic has wrecked downtown San Francisco, which became a bubbling epicenter for tech during the past decade like never before, but now faces one of its toughest reinventions in a history of booms and busts.
The city of undulating streets, panoramic views, and booms and busts is now facing a major economic upheaval, as persistent crime, homelessness and high costs are keeping many tech office workers away, and making tech companies rethink their offices. While the city is lately portrayed as going through an apocalyptic descent into hell, this is really just another bad bust cycle for a downtown core that has experienced many before.
But as housing costs climbed, and homelessness and crime increased everywhere, the pandemic fueled a migration of about 7% of San Francisco’s population, or around 59,000 residents, to more affordable cities from April 2020 to July 2021, according to U.S. Census Bureau data. Cities like Atlanta and Miami are becoming new tech centers, and rural towns in Montana and Wyoming are attracting dispersed tech workers and bosses.
Kelsey Bishop, founder and chief executive of Candor, a startup professional network to help co-workers connect in a remote environment, agrees. Bishop left San Francisco in 2021 and now divides her time between Lisbon and New Jersey, mostly working remotely. The city’s downtown Financial District and South of Market have some of the lowest office attendance rates in the U.S., and San Francisco’s commercial office vacancy rate was 23% in the third quarter, according to Cushman & Wakefield Research, the same level it reached in 2003 amid the fallout of the dot-com bust. Data from the UC Berkeley researchers indicated that Salt Lake City; Bakersfield, Calif.; Columbus, Ohio; and Fresno, Calif.
“San Francisco has a Frankenstein tax system,” Stojkovic said, adding that all the recent tax measures voted on by the city were during boom times. “It was all based on the longest bull market in 100 years. We said we cannot keep adding all these taxes.” “All this has a massive ripple effect on our economy,” he said. “We can’t just hope that people are going to come back to the office.”
Cumbelich recalled the 1980s, when companies like Bank of America BAC, -2.26%, Chevron CVX, -0.86% and Pacific Bell moved their headquarters out of the city, as a real stagnant time, until tech began to emerge as a new industry in the mid-1990s. Indeed, some areas of downtown are busier. Some lunch restaurants have reopened since the pandemic, and there are more people walking in the streets during the day. On a Monday night after Dreamforce was long over, it was busy at Tadich Grill, one of the city’s oldest restaurants. But it’s still not like it was, and some businesses are still seeing a huge drop in revenue.
Egan, the city’s chief economist, believes that working from home is still evolving, and is very fluid, and could change on a dime. “You have become a victim of your own success,” said Robert Ackerman Jr., managing director and founder of AllegisCyber Capital, who sold his home in the city’s posh Pacific Heights neighborhood and moved to Wyoming two years ago. Doing a renovation on his building with a scaffolding required a 24-hour security guard. “I live on airplanes so I can live anywhere…I just saw the steady decline of quality of life in the city, it’s not for me.
“Things were extremely concentrated in San Francisco for many, many years,” Gupta said. “That does get more distributed to these other hubs, including New York.”
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