The operator of the gondola that services Salesforce Park, an oasis among the skyscrapers in downtown San Francisco, will tell you all about how the 5-acre (2-hectare) rooftop space you\u2019re about to enter contains 1,600 plants, 600 trees and more than a dozen ecosystems.<\/p>\n\n\n\n
From this far up the fortress walls, the city looks like a futuristic utopia, with office workers milling about in the sun and free yoga on Fridays.<\/p>\n\n\n\n
exterior with blackboards on street and mural showing women. two men stand outside<\/p>\n\n\n\n
The food court rising above San Francisco\u2019s \u2018doom loop\u2019: \u2018We\u2019re breaking down stereotypes\u2019<\/p>\n\n\n\n
Read more<\/p>\n\n\n\n
But the transit center underneath \u2013 the newly built hub that was announced before the pandemic with great fanfare and was supposed to ferry in workers from all over the region to downtown \u2013 is quiet, save for the metaphorical tumbleweeds. The city\u2019s main public transport systems are collapsing under the weight of their own emptiness. The number of riders on the Bart system is around 40% of what it was before the pandemic, and only 30% for riders who exit in downtown San Francisco. Without a $5bn bailout, service cuts to some of the city\u2019s transit lines could start as soon as this summer.<\/p>\n\n\n\n
Once home to some of the most expensive and sought-after office space in the world, San Francisco today is suffering from one of the most hollowed-out downtowns in North America.<\/p>\n\n\n\n
Along Market Street, the main thoroughfare, \u201coffice space available\u201d and \u201cfor sale or lease\u201d signs solicit new businesses. Office vacancy in the first quarter of 2023 ranged between 26.4% and 29.4%, depending on the tally. It\u2019s a steep increase from the historic low vacancy rate of 4% in early 2020. Pinterest, Meta, Reddit, Salesforce, Slack, Uber and Twitter have all vacated or reduced their office space as remote or hybrid work has prevailed.<\/p>\n\n\n\n
The emptiness has made some of the city\u2019s other problems \u2013 an enduring homelessness emergency, open-air drug use in some neighborhoods and high rates of property crime \u2013 seem more visible. And it has sparked speculation that the city is at the verge of a so-called \u201cdoom loop\u201d, a spiral down into debt that will force it to cut social and transportation services, which will in turn perpetuate more disinvestment.<\/p>\n\n\n\n
The city has seen an enduring homelessness emergency.<\/p>\n\n\n\n
The city has seen an enduring homelessness emergency. Photograph: Anadolu Agency\/Getty Images<\/p>\n\n\n\n
San Francisco\u2019s chief economist, Ted Egan, thinks that label is probably premature. \u201cTo me, a doom loop is Detroit in the 1970s. There\u2019s nothing you can do to bring auto plants back \u2013 every auto plant that closes makes the next one want to close, and a cycle of disinvestment makes people want to disinvest more.\u201d<\/p>\n\n\n\n
It\u2019s everything but tech that hasn\u2019t recovered<\/p>\n\n\n\n
Economist Ted Egan<\/p>\n\n\n\n
Despite layoffs in past months, the tech economy of the Bay Area is strong, argued Egan, with more tech jobs in the city now than at the start of the pandemic. Unemployment in the city is the second lowest in the state, he said.<\/p>\n\n\n\n
But he admitted the city faces significant challenges. \u201cIt\u2019s everything but tech that hasn\u2019t recovered,\u201d he said \u2013 and without businesses downtown, why would anyone go there?<\/p>\n\n\n\n
Downtown businesses suffer, city coffers dwindle<\/p>\n\n\n\n
Tech workers in the Bay Area built the tools for working remotely and then embraced remote work more than any other region in the US, according to the US Census Bureau. For the restaurants, cafes and bars that serviced those workers, and the small businesses and retail that depended on workers\u2019 foot traffic, the consequences were stark.<\/p>\n\n\n\n
A study out of the University of California, Berkeley, and the University of Toronto comparing mobile phone data across 62 downtowns in North America found that San Francisco\u2019s recovery is dead last, with only 31% of the activity it had pre-pandemic.<\/p>\n\n\n\n
\u201cBefore [the pandemic] it was always very busy, but now it\u2019s very slow,\u201d said Lydia Wong, who has been serving to-go comfort food at Yo-Yo\u2019s, a Japanese mom-and-pop lunch shop in the financial district, since 1988. \u201cWe can watch Netflix now,\u201d her husband, Joseph Lee, joked.<\/p>\n\n\n\n
The Old Ship Saloon, a bar that serves craft beer and pub grub and has been open since 1851, is lucky to still be around. \u201cA lot of bars and restaurants have gone out of business,\u201d said Eric Rogers, a bartender who was working solo through a mini lunch rush.<\/p>\n\n\n\n
The Old Ship Saloon was originally converted from a 19th-century sailing ship, the Arkansas, which is still buried in the bar\u2019s foundations. Since the pandemic, the bar\u2019s owners have had to pare down staff in order to make any money. \u201cWe just count ourselves lucky that we\u2019re still able to be open. You have to work harder,\u201d said Rogers while pouring drinks, taking orders, serving food and working the cash register.<\/p>\n\n\n\n
At the moment, it\u2019s mostly businesses downtown that are feeling the squeeze. But that slowdown is affecting city coffers, which in turn could spark cuts that will affect the entire city. More than 75% of the city\u2019s total GDP is generated downtown, and the businesses there account for nearly half the city\u2019s sales tax revenue and 95% of its business tax revenue. The city is staring down a $780m budget deficit over the coming two years due to rising costs and plummeting business, sales and transfer tax revenues, jeopardizing funding for essential services from public safety and cleaning to transportation.<\/p>\n\n\n\n
San Francisco really placed a bet on huge commercial office development, more than anywhere else maybe in the world<\/p>\n\n\n\n
California assembly member Matt Haney<\/p>\n\n\n\n
\u201cSan Francisco really placed a bet on huge commercial office development, more than anywhere else maybe in the world,\u201d said California assembly member Matt Haney. \u201cThey placed the biggest possible bet on something that went bottom-up. They lost. So now we have to adapt and adapt quickly.\u201d<\/p>\n\n\n\n
According to Haney, part of the solution lies in downtown\u2019s emptiness.<\/p>\n\n\n\n
With high-rises full of empty office space, many artists and low- and middle-income residents priced out, and the most disadvantaged residents of the city housing themselves on its sidewalks, could this vacancy crisis be an opportunity to tackle this emergency in housing and homelessness?<\/p>\n\n\n\n
Haney is proposing a state bill that would circumvent some of the notorious red tape that hinders the construction of new housing by fast-tracking the permitting process to convert offices into housing in empty downtowns.<\/p>\n\n\n\n
\u201cIf we\u2019ve already approved an office building, we shouldn\u2019t treat it as though it\u2019s a new housing development and force it to go from square one with all the hearings, appeals and fees,\u201d said Haney. \u201cIt\u2019s in the public interest to get housing in a building that would otherwise be an empty office, and so we\u2019re going to essentially waive everything to make that happen.\u201d<\/p>\n\n\n\n
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Dean Baker, co-director of the Center for Economic and Policy Research and one of the first economists to sound the alarm on the housing bubble that exploded into the 2008 financial crisis, thinks the move makes sense. \u201cThe city is set up to serve a large commuting population. That population is gone and not coming back. It will be a doom loop if the city doesn\u2019t make it a top priority to convert commercial to residential,\u201d he said.<\/p>\n\n\n\n
It will be a doom loop if the city doesn\u2019t make it a top priority to convert commercial to residential<\/p>\n\n\n\n
Dean Baker of the Center for Economic and Policy Research<\/p>\n\n\n\n
Gensler, one of the largest architecture firms in the world, has a metric for assessing buildings\u2019 suitability for conversion, and in a report published earlier this year by the San Francisco Bay Area Planning and Urban Research Association, it found that converting downtown offices in San Francisco could physically accommodate around 11,200 housing units. But these conversions are not financially feasible given the current challenges to building in the city, the firm said.<\/p>\n\n\n\n
\u201cI think it would make a lot of conversions more possible,\u201d said Holly Arnold, an architect who leads Gensler\u2019s residential practice in the Bay Area, when asked about the proposed bill. A lot of developers stay away from San Francisco because they \u201cjust don\u2019t have the stomach or the tolerance to be able to go through the process\u201d.<\/p>\n\n\n\n
Egan, the city\u2019s chief economist, is skeptical that office-to-housing conversions are going to change the dynamics of downtown in time to save any small businesses. \u201cIt\u2019s not going to be the horse that pulls the cart. It might be the cart. But I tend to think that the return of office workers, one way or the other, is going to be the thing that does it.\u201d<\/p>\n\n\n\n
Owners prop up teetering real estate values<\/p>\n\n\n\n
For the city\u2019s property taxes and for property investors, the real crisis will hit in the coming years if office leases start to expire with no one willing to sign on. The office availability rate is currently at 35%. But rents aren\u2019t budging as much as you\u2019d expect in a market with such little demand and so much availability.<\/p>\n\n\n\n
The Salesforce Transit Center and Park.<\/p>\n\n\n\n
The Salesforce Transit Center and Park. Photograph: Eric Risberg\/AP<\/p>\n\n\n\n
\u201cMy guess as to why office rents have not fallen more is that the owners are worried about the impact on appraisals for either new loans or sales,\u201d said Dean Baker. \u201cIf you cut the rent by 50%, that will quickly be reflected in an appraisal.\u201d<\/p>\n\n\n\n
Sitting in Salesforce Park was Chris Carlsson, a local historian and co-director of Shaping San Francisco, which provides walking, biking and bay cruise history tours of the city. He gestured to the soaring towers around.<\/p>\n\n\n\n
He thinks their value is about to crater. \u201cThe people holding that value will lose it. And they will be sad, and they\u2019ll be jumping off buildings, and they\u2019ll be freaking out,\u201d said Carlsson, who sheds no tears for property investors. \u201cThat\u2019s fine. That\u2019s capitalism, right?\u201d<\/p>\n\n\n\n
Start taking stuff down. Why have these towers here if there\u2019s no use for them?<\/p>\n\n\n\n
Chris Carlsson of Shaping San Francisco<\/p>\n\n\n\n
\u201cWhat does a de-worked downtown look like?\u201d Carlsson mused. He thinks converting as many buildings to residences is one answer. But there\u2019s another option. \u201cDeconstruction is a possibility,\u201d he said. \u201cStart taking stuff down. Why have these towers here if there\u2019s no use for them?<\/p>\n\n\n\n
\u201cMaybe there will end up being waterslides in there,\u201d he added, only half joking. \u201cFive stories of waterslides and amusement parks. Why not make giant pinball arcades?\u201d<\/p>\n\n\n\n
Some 175 years ago, there was a gold rush that brought hundreds of ships from all over the world, down the road from where Salesforce Park is now located. Prospectors dreaming of riches couldn\u2019t wait to anchor in San Francisco Bay before jumping ship, hundreds of which jammed the bay.<\/p>\n\n\n\n
Some entrepreneurial folks found ways of staking claim to prime real estate by running ships aground in the shallows of the bay. There are dozens of ships that make up the foundations of downtown San Francisco. Some folks will no doubt find a way to strike gold if and when this city\u2019s commercial office market collapses too.<\/p>\n\n\n\n
Everywhere you go in the city, ruins of a former economy and culture now thrive in a completely new incarnation. A navy shipyard is repurposed as studios for hundreds of artists; an armory becomes an adult movie studio and then an event space; a church becomes a space for a roller skating disco party; the old federal penitentiary on Alcatraz island is one of the city\u2019s most popular tourist destinations; a furniture shop becomes Twitter\u2019s HQ.<\/p>\n\n\n\n
If the city could convert four blocks of downtown into a surreal rooftop garden, maybe \u2013 just maybe \u2013 it can transform these downtown offices into something better suited to the future.<\/p>\n\n\n\n