Downtown as a healthy fully occupied business district is dead. Cause of death: remote work. You can wait 50 years if you want and see if it comes back, but it never will; there’s no going back.
You can’t harangue workers into reversing that, and you can’t browbeat business owners into paying for space that goes unused.
If you assume a lack of business renters being able to occupy the space or live off the people coming do business there, there’s only one customer base left: residential.
“But it’s hard to retrofit”, “we’ll have to redo the laws”, etc. Well, ok. You can wait to see if things will change, but they won’t. Eventually the property owners, and a city in need of tax revenue, are going to have to come to terms with the new reality.
When they do, even if it’s three decades from now, there will be more housing in that area. It will keep the streets filled, it will keep crime down, and it will bring in tax revenue… eventually. It’s anybody’s guess how long that will take, however.
The Financial District and especiallyunion square area could be amazing if it was zoned for residential with commercial on the first floor. Parts of it could easily rival some of the nicer neighborhoods in Europe. For the larger buildings, make every 6th floor a shared space, put a restaurant/bar/clubhouse on the roof for residents to use and rent.
I have a friend who lives here
the top floor has a restaurant with nightly entertainment, party rooms to rent, tennis court, pool, gym, outdoor patio
It seems premature to say this with confidence, though. Last time I saw the stats, remote work overall is down to 10% and still dropping pretty fast. Yes, prevalence is higher in the tech world, but still, we should wait until it stabilizes (especially with an incoming recession) before proclaiming that two years of remote work has changed the world.
It’s never coming back. Companies that know have been shutting their SF offices. Once it starts it’ll become a positive feedback loop. And it’s well underway.
An added wrinkle is that the city is addicted to spending. When income drops they’re in for a rude awakening. Already dysfunctional government offices will cease to function entirely. SF is headed for some dark times.
(Bias: I moved out in 2020, even though I was rent controlled at 2012 prices. The city was great at 2012 prices, but we knew leaving meant never coming back. Even so, QOL has improved a lot since leaving.)
Isn't that by definition false? If living here was worth less, rents and home prices would drop. Sure, rents dipped quite a bit during the pandemic, but they've recovered somewhat, possibly completely. Home prices didn't change much. And yes, I know that these costs are propped up by things like zoning, the city planning process, NIMBYism, etc., but that doesn't really matter: there's still -- somehow -- enough demand to keep prices as high as they are.
(Bias: I bought a condo in the Dogpatch in 2020, right before the pandemic hit. I've been really happy with our QOL since moving, even during the pandemic. The neighborhood has mostly recovered, with only a few businesses closing permanently.)
You’re right, and it’s been true for a long time. Remember, it took the city approximately 30 years to remove the Embarcadero Freeway, even though its removal was first proposed in 1963. And the only reason they fully executed on this plan was because the damage from the Loma Prieta earthquake forced their hand in 1989.
Remote work reduces demand for downtown office space, but where is evidence that it reduces it below supply?
Demand was very high - downtown office space was very expensive. Many businesses that would love to open up or move downtown previously couldn't. Now they can.
Cheap inputs like office space, in a great city with great transit, etc., with proximity to other businesses and services, is a perfect place for entrepreneurs and startups. This economic change could unexpectedly, at the height of SV costs, create a low-cost community of startups right in SF.
It's speculative, but so is the doom and gloom. The first who see the opportunity when everyone else is wailing and gnashing their teeth will be the ones to cash in. Maybe me!
Plenty of office space is being used nationwide. I’m fine going into my New York or Mountain View offices. I would not want to commute into or around San Francisco.
Valencia-Dolores was just fine before the gentrification. A better analogy would be the comparatively quick tear down and demolishment of the Embarcadero Freeway, which had formerly been a blight on the city for decades and blocked the beautiful waterfront. Once it was torn down and that area redeveloped, hardly anyone can imagine a good rationale for ever building it in the first place. That’s one of the greatest success stories of modern San Francisco, and it’s likely the downtown area can benefit from the same approach. People didn’t want to hear that about the Embarcadero Freeway and fought against bringing it down for years, but in retrospect, everyone now knows they were dead wrong.
The reality is that a building owner doesn't want to lower the asking rent because it will devalue the building. They make more money owning a building with high rents than they lose having it sit empty. Nobody actually checks if these "high value" real estate properties on paper are actually occupied.
Sf would be smart to make deep cuts now to free up budget. Going as far as putting a ballot initiative to end maybe prior proposition earmarks.
It's pretty unlikely that office space/buildings will be retro-fitted for residences.
Is this contradictory to the reason that startups are funded in S.F proper? I remember many articles and social media posts were saying along the line that people chose to work in S.F because they loved bustling city life. Yet the city is doomed because people wanted to work remotely en masse?
San Fransisco is fun but a big pain in the ass to get to and live in, even compared to the rest of the area.
It might take a few years until we get there, but we will.
What we’re actually going to see is a division better highly skilled people going to companies that understand what humans need and lesser skilled or otherwise problematic employees settling for the less desirable jobs with backwards looking management and worse total compensation packages/work life balances. These regressive companies will slowly implode due to cancerous cultural issues that will blossom wonderfully when toxicity is given the fertile ground of desperate and problematic staff coerced into interacting in bullshit jobs.
COVID didn't do what I expected. Instead of online learning moving into the mainstream, we got emergency crappy online learning, and the world burned out on online learning. Everyone now believes it can't be done.
All the businesses I worked with switched to WFH, equally poorly. In my current job, working from home, I feel isolated and asocial. I hate it. That's true of many coworkers as well. It's not the fault of remote work, but it's the fault of the very poor implementation of remote work at my employer.
I don't think my employer is unique here.
I now share your prediction.
Keith Rabois said one of the the major reasons he moved was because of crime.
Surely, something can be done, normally with big effort compared to the final outcome, but not more than that.
In the very past was easier: rate of change was FAR slower, cities was built with rocks and some wood, the very same rocks can be "moved" to build something different and woods can be sourced nearby. The city was able to rebuild itself. Normally after some catastrophe. Modern cities tend to be steel and concrete, not easy to be "reused" especially locally. As a result modern cites need to be rebuilt from the ground today and IF we accept such enormous challenge when they'll be rebuilt will probably be not good anymore because tech and so business/needs are already changed.
In the recent past the idea of a thriving city was simply: we have living places and commerce concentrated, if tomorrow a certain family of shops became obsolete and disappear others will occupy the same places with minor changes, like we do not have anymore the need for stearic candles but at their place light bulb shops arrive, we do not have much classic restaurants and at their place small kitchen for ready-made food delivery take their place etc. That's effectively worked for a certain amount of time. Factories are outside, they have room to change, agriculture have room to change and people live in cities.
Now such model is in crisis, climate change force new kind of homes, it's not just a matter of changing windows and some appliance. New small homes are easier to rebuild, you crush the old one, build another at the same place. Tall buildings are another story and most cities are made of tall buildings especially downtown.
That's the real crisis, it's not a matter "due to remote work some offices are empty and activities around them can't survive": no one take this places because it's not anymore a simple "economical shift" in the same model.
Since we dream a future of flying cars density for economy of scale will be FAR LESS dense than now and that's give the ability to change, cities can only be small/medium and on-purpose, like classic manufacturing districts.
The really unpopular part is the fact that in such model too many will be new poor and of course they do not like such idea, we do not like that being not so sure for ourselves since even wealthy today a big shift might be hard to sustain.
Why would any business set up shop in these conditions. Remote or not, plenty of safer & cleaner spots in America to do business.
The issue is that once a particular practice in relations between capital and labor becomes ingrained, conditions of competition make it very difficult to shift the balance. You would effectively have to have a non-competition agreement between big tech companies over this clause, because highly paid workers can and will leave for perks like remote work.
Remote work takes that those seating costs right to zero, and it's already been proven out with ample data demonstrating that productivity suffers little, if at all. There are a plethora of multi-billion companies that are 100% remote to really drive this point home.
In-office work isn't coming back any more than personal offices with doors for individual contributor engineers are coming back.
Sure, the tax revenue looked great, but it happened in a way that caused great human suffering by making occupancy in the city zero sum, and awarding it to only those who had the most money to pay. That's not how it had to be, and choosing a zero-sum economic system rather than positive sum was foolish, and only meant to appease those with conservative views on construction. And by basing tax revenues on the business cycle, SF is now at such great risk, with huge social spending needed to repair the damage it inflicted with this unnecessary zero-sum system.
Sadly, those who will be hurt the most by a potential downturn are not those who benefited by setting up a bad system. A downturn will help nearly no one, and cause great suffering. I feel a little sick in my stomach when I hear some hoping for a downturn, either as a chance for them to finally buy real estate, or as a chance for S.F. to be made great again by returning to some imagined past. Both of these are very unlikely, especially the second.
We bought a home in the Bay Area a few years ago. We considered the pros/cons of moving out of state and one pro of staying here was Prop 13 in California. We plan to retire in this home and figured Prop 13 will help make our post-retirement living expenses negligible.
I only recently had the realization that Prop 13 could cause some serious problems like cities being incentivized to encourage resident "turnover" because new residents would be subject to current level property taxes.
Another issue is cities having to rely more on sales taxes which discourages building residential housing and encourages building of commercial properties. Also when a recession hits then the cities are hit even harder because they aren't able to collect those sales taxes.
We found that Bay Area schools are begging for money constantly and theorized that very low property tax income is a big part of that too.
I mean... I like paying less but something about it feels wrong. Property taxes are a big source of income are they not?
Some of these are gonna spark controversy but term limits, the recall and ease of passing propositions are some of the other ones.
The legislature is no longer professional enough to govern, so the people do it at the ballot box, at the behest of whom ever has the most money to spend. The fact that California is a single party state because of realignment and radicalization on the right makes all of this worse.
More like "enlightened views on wealth preservation." You can follow the incentives on this one. It's not that complicated.
However, SF and California is largely run by a small handful of families who are "kingmakers." The Buells, Fishers, Guggenhimes, Gettys, Marcuses, Pritzkers, Swigs, and Trainas.
https://www.latimes.com/politics/la-pol-ca-gavin-newsom-san-...
> "My biggest fear is the city either has to slash spending on, say, police, or it aggressively puts up taxes on businesses to cover the shortfall and drives them out of the city," he said.
It's always "we'll have to slash spending on basic city functions!" or "we'll have to raise your taxes!" but never "we'll have to cut all these unsustainable social policies!"
I don't want this to turn into an ideological battle, but my understanding was that in SF, that is not an unpopular stance. Is this not the case?
While I don't think that is a surefire way of fixing dtsf but it is a start. The superdense neighborhood of chinatown and somewhat dense neighborhood of little italy are pretty lively still, probably because everyone lives above the commercial and retail spaces that exist there.
(There's not much commercial offices in those neighborhoods but there's a few, especially between california and bush)
Companies didn't want to move back into some of the office buildings so they were converted into residential housing.
I remember dating someone who lived down there and looking up at the ceiling and mentioning "Why do you have such weird drop ceilings here?" This is where I found out her apartment used to be an office building.
Probably because the supes are elected by neighborhood, they are very NIMBY.
Source: https://www.kqed.org/forum/2010101889483/what-would-it-take-...
Converted apartments are not going to be "affordable" (by say the likes of students, and people just out of college not in finance or tech.
Once the white collar workers leave, there is less demand for service workers to live there. Sure maybe some salaried workers like in emergency services and policing might choose to live there. If I were a service worker, living in SF proper would not be the thing I'm looking to do.
Years ago, the center of the action in "Silicon Valley" was actually in the geographical valley, in the south bay. The south bay is way different from SF - safe and sterile. Some people would move up to SF and commute all the way down to the south bay just because they wanted to live somewhere interesting. Those sort of people also tended to be the sort to start startups, and the center of the action gradually moved to SF.
I think SF can try following the same path a second time, focus on catering to the gritty hipster demographic and hope something valuable grows out of it. Added housing to push rents lower seems like a good start.
Once the balance between supply and demand is similar, urban living should be cheaper than suburban living, because urban areas need less infrastructure for each resident.
It effectively has no zoning which means you get oil processing plants built next door to elementary schools.
The Austrian Economists will jump in here and say that's why certain private property developments buy the equivalent of "sky rights" (or "land rights" I guess) with adjoining properties to effectively create their own zoning.
Maybe I am next to your house. I want to have a hog farm or a 24/7 very loud factory.
> “We had our best year in 2021,” said Santino DeRose, managing broker at Maven real estate. “The neighborhoods by far, where people lived and worked, came back the fastest.”
This actually might be a good thing. If the city gets optimized for people who want to live there verses people who are forced by their job to work in the city, in the long term it will be better for everyone and relieve some of the upward pressure on housing.
- Add housing
- Add staffed public toilets
- Pilot office conversions that assume only half the workers show up on a given day.
No wonder it's struggling with remote work, there's no incentive to go there. If somebody would be living there, then there would always be someone around to shop, drink or go to work.
https://www.theatlantic.com/ideas/archive/2022/06/how-san-fr...
The headline makes it sound like an exercise in question-begging, but it really isn't, as the author makes clear.
AKA offloading the costs onto individuals by forcing them to show up to work the old way. The city needs to pivot to focusing on its full time residents and less of the business sector.
It turned out what they actually got was a DA that literally did not do his job, and just had literally everyone arrested put back on the street. Apparently also trying to get his father out of criminal charges as well?
That goes a long way to explain the overwhelming recall in last? weeks election.
If SF wanted to clean things up, they'd have cops walking a beat in the Tenderloin--something I never say in the 12 years I lived there. I think the lack of any political competition has led to politicians who don't give a shit about what's best for residents and can just coast off the vote blue no matter who mentality.
They've been at it for a while now, and the main result has been intentionally crippling the road system at great expense (without fixing public transit). So, I'm not convinced allowing a regional authority more power to sabotage transportation networks is a good idea.
There are also mandates to add affordable housing, but those are either ignored or lead to boondoggles. (Construction is ridiculously overpriced in California. They may as well be mandating affordable dollar bills.)
One way to fix it would be to streamline permitting, etc for new housing (they did this for ADUs, but that's explicitly limited to housing that's inappropriate for families).
Typical permitting delays in south bay are something like 3 years for new construction (enjoy those double mortgage payments!), and nonsensical requirements add at least 50% to construction costs on top of that.
This could be solved in a few months by Sacramento outlawing such practices, then closing and replacing any non-compliant planning departments.
People aren't in San Francisco because they don't want to be in San Francisco.
Even the people that "loved San Francisco" didn't even like things in the actual city limits, talk to nearly anybody about what they like there and they'll pick an endless list of things from the Pacific Ocean to the border of Nevada. Other cities aren't like that. Red Flag 1 through 10.
There are people that like things in the city limits, 30 years ago. You'll know because they'll tell you about how a nice neighborhood used to be the most hellish thing you could ever imagine and would never visit, but at least artists used to lived there. Which is what they fawn over. As if someone else was going to pay for this $100 haircut, but if I see any gentrifiers I'll bark at them for you! scouts honor.
And finally you begin to notice that almost all the other people that think they like(d) that city don't have an objective view of other metropolises to compare it with. Oh, I get it, this is "The City" for that region that people aspire for, because its 600 miles of frontier from there to Portland, Oregon. A couple aspirational people from Central Valley, "escaping" (their words), a bunch of economic migrants from across the US, visa holders that have no choice in the matter. Okay. Interesting. There were very few people from other cities that really just liked all the nature, and again, fewer of those are talking about the nature within the city limits. All that masked by actual geographic scarcity exacerbated by artificial scarcity to make the high prices seem like there was something to covet? Yeah, everyone that could leave has left.
> The transit system’s looming deficit has given rise to whispers of a new regional tax to fill the gap.
death spiral.
Obviously this is just my experience, I bet many will have seen something similar. I don't think the city government policies are as big of a factor as people think. People saw an option to leave due to the nature of their work, and did.
This isn't consistent with my experience at all. When I lived in SF, having moved to work for Salesforce, I spent a ton of time at street fairs, nightclubs, museums, concerts, parks, etc, and that's before I get to the food. Most of my friends seemed to be doing the same.
I mean, I have nothing against Lake Tahoe -- it's great -- but you could get that by living in Albuquerque, and the snow to jerry ratio is a lot better.
This is a reference to the rental prices. I can see how I didn't make that clear. SF fell the hardest out of metropolitan areas and has grown the slowest.
https://www.bloomberg.com/news/articles/2022-03-21/san-franc...
Source for that Tableau dash: https://www.sanfranciscopolice.org/stay-safe/crime-data/crim...
