San Francisco is navigating a complex landscape as it approaches a crucial election season, with key economic indicators revealing a city still in a delicate situation. Despite a promising uptick in activity this past summer, as Mayor London Breed pointed out signs of a revival, experts are urging caution against becoming overly optimistic. They predict that the city’s recovery will be challenging and gradual, and the looming specter of a “doom loop”—a cycle of economic decline—remains very much alive.
There are tangible symptoms of this doom loop evident throughout San Francisco. Office buildings are mostly empty, with a staggering 55% decline in the number of workers commuting to the downtown area compared to pre-pandemic levels in 2019. While last month saw a peak in public transportation ridership post-pandemic, BART traffic in the city center still sits at only one-third of its 2019 numbers. Major hotels are facing imminent foreclosure, and there are currently 1,500 workers on strike advocating for better wages. The retail landscape paints a similarly bleak picture, with numerous storefronts lying vacant, prompting city leaders to brace for projected budget deficits exceeding $2 billion over the next two fiscal years.
Both office vacancy rates and hotel occupancy have worsened over the summer months, while unemployment figures are also on the rise. Compounding the issue, several schools may face closure due to declining enrollment and staffing shortages intensified by the pandemic. The tech sector, once a cornerstone of the economy, continues to see layoffs.
Despite efforts to accelerate the approval of development projects and convert office buildings into much-needed housing, construction cranes remain a rare sight on the city’s skyline. Public transportation and the hospitality sector, essential elements of San Francisco’s economy, are still struggling to regain their footing.
However, a recent Chronicle poll from August indicates a notable shift in voter perceptions regarding the overall quality of life in San Francisco since the year’s start. Data suggests a change in downtown visitor patterns, with increased foot traffic on weekends hinting at a potential transition from an office-centric environment to one embracing more leisure activities.
While the number of vacant offices continues to rise, the rate at which they are accumulating has slowed, with demand for office space gradually stabilizing, returning recently to pre-pandemic levels. Major developers in the downtown commercial and housing sectors maintain an optimistic long-term perspective.
Looking forward, opinions on San Francisco’s future are varied. The Bay Area offers significant advantages, including a strong tech workforce, esteemed universities, and a leading position in artificial intelligence. Even during economic downturns, the city’s GDP impressively hit $252 billion in 2022. Nevertheless, even under favorable circumstances, San Francisco may require several years to tackle the challenges posed by vacant offices and shuttered storefronts.
