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San Francisco, like most major cities around the world, suffered an unprecedented blowback during the COVID-19 lockdown. Unlike New York and even other urban centers in California, however, the Golden city has yet to show signs of recovery. Now, many entrepreneurs and leaders such as tech CEO Mark Benioff are despairing of the long-term prospects for downtown San Francisco.
For roughly three years until the end of COVID emergency in April, city officials in San Francisco promoted strict public health measures in accordance with the State and federal guidelines. Thousands fled the downtown to suburbs or joined alternative online communities. As workers and businesses are now increasingly realizing, this has created a culture of remote work and entertainment from which few are willing to fully return.
The heavy concentration of technology companies in downtown San Francisco nonetheless makes it a special case. As much is clear from the latest data about office vacancy rates in the city. In October, the occupancy rate in Frisco sat at an abysmal 39% at a time when Austin boasted 61%. The vacancy rate hovered around 25% during the first quarter of 2023, one year after the mask mandate was lifted, well above the national average.
Many fear the situation might actually get worse as more and more companies decide against renewing their leases. Recent data shows that over 30% of downtown office buildings have space available for renting, more than 10% higher than Q1 last year.
San Francisco has already lost a large number of business with symbolic presence in the city. The Salesforce office building, the tallest and most spacious of its kind in downtown, can be seen nearly empty as most of the company’s workforce continues to participate remotely. Last week, Anchor Brewing Co. closed its 127-years-old store in the downtown thanks to a “combination of challenging economic factors and declining sales since 2016”. Countless brick-and-mortar retail stores and brands have hung signs of ‘going out of business’ as the city crowds of the 2010s wither away in an era of digital commerce.
Anecdotes show that more businesses are leaving in a hurry, or moving to other locations on the bay. A 22-story office on 350 California Street is expected to be sold for only $60 million this year, a far cry from an evaluation of $300 million in 2019. The former WeWork office just a few blocks away has lost two-thirds of its value and is 97% vacant since the company left.
Entrepreneurs like Salesforce CEO Mark Benioff fear this reversal might be permanent. “We need to rebalance downtown”, says the veteran businessman whose company owns the largest office in the downtown. He suggests redeveloping office buildings into housing, an idea that has already been tested with some success by New York and other rival cities.
Black Businesses are still trying to thrive despite Covid setbacks but Azikiwee Anderson, the owner and head baker of San Francisco’s Rize Up Bakery is one of many who still have a consistent client base.
Currently, Rize Up Bakery’s offers a Pay it Forward program which donates loaves to homeless shelters, battered women shelters, and senior centers. Check Out Rize Up Bakery on Instagram. https://www.instagram.com/rizeupbakery
Azikiwee Anderson, the owner and head baker of San Francisco’s Rize Up Bakery, poses for a portrait. Photo: Kari Vides
It is also likely that as the city government’s revenues from retails and property fall, the downtown might experience tax hikes and regulatory changes. The same vicious cycle can be observed in city centers across the country. It will take a major developmental effort to adapt the downtown sprawls of the industrial era to the technological reality of the twenty-first century.