by Randy Shaw on December 4, 2023 (BeyondChron.org)
A Tough Year for The City
Two words capture San Francisco’s mood in 2023: diminished expectations. Hopes faltered that 2023 would mark a return to pre-COVID San Francisco. Businesses closed, downtown and Mid-Market office buildings stayed vacant, and open-air drug markets still thrived.
2023 was not a good year for San Francisco. Here’s why.
Working From Home
San Francisco is the city most impacted by workers continuing to working from home. It’s downtown office vacancy rate of 35% is the nation’s highest, with buildings vacant either two or five days of a traditional work week.
In-person public events returned to pre-COVID days. But downtown office occupancy did not.
The loss of in-office downtown workers has really hurt San Francisco. And a recent census report found little hope that five day a week work will soon return. Nationally, working from home remained flat in 2023 with in-person office workers at 40-60% of pre-pandemic levels.
Restaurants that survived the tough COVID years expected their customer base to return in 2023. Many closed when that didn’t happen. We learned in 2023 just how dependent on downtown office workers are bars, restaurants, theaters and entertainment venues across the city.
City, state and federal workers based in the Civic Center also stayed home. That eliminated the prime customer base for many Tenderloin, Civic Center and Mid-Market lunch spots. My own two top places to get lunch, La Cocina and Turtle Tower, both closed. As I recently detailed, the Tenderloin’s Little Saigon has eighteen retail vacancies on its four blocks—restaurants can’t survive the loss of public workers and the drug markets nearby.
Tourism’s Decline
Diminished expectations also surrounded city tourism. When 2023 began hotels thought the city’s high tourism rates would finally return. That didn’t happen. In August Park Hotels & Resorts walked away from operating the Hilton San Francisco Union Square and Parc 55. It’s CEO told the SF Chronicle, “You can see that San Francisco is a real outlier. I spend as much time in San Francisco as anybody, and the key takeaways were that the recovery period there would be extended. We thought one to three years. I can tell you, being on the ground as early as 10 days ago, it’s probably five to seven years.”
Many non-luxury hotels depend on conventions that didn’t happen in 2023. Business and family travel remains down. And while occupancy rates rose over 2022, they still reflected a lower than pre-COVID price.
Like downtown workers, tourists patronize restaurants, bars and entertainment venues outside the core tourist areas. Their absence hurts.
City Hall has floated ideas for reviving downtown. But attracting a university or converting offices to housing is years away. And why would a university open up in downtown when the city isn’t protecting historic UC Law SF from violence?
Open Air Drug Markets
Many of us hoped that in 2023 the city would finally close open-air drug markets. A powerful public campaign by TogetherSF Action was waged toward this goal. It brought national and even international publicity.
But other than in the weeks leading up to APEC, drug markets thrived. San Francisco still has more open air drug users and trash filled sidewalks than other cities. No other major city nationally or throughout Europe has open drug activities like those routinely seen in San Francisco
Whole Foods and Nordstroms closed in Mid-Market after police failed to protect their stores from thefts and drug activities. Nordstrom’s departure was followed by others leaving the Westfield Center; one of the city’s most popular shopping malls is now largely vacant.
Mid-Market’s most productive new investment was in the transformation of UN Plaza into a skate park and recreation area. IKEA also opened. But Mid-Market office buildings suffer from a lack of demand. And the area’s pre-COVID role as a lower-cost alternative to downtown has changed now that downtown office rents have plunged.
While the Tenderloin would be successful if the city removed drug activities, Mid-Market’s challenge is greater: a lack of demand for offices and a lack of daily foot traffic for ground floor retail. Let’s hope the winter opening of the IKEA building with its food court and entertainment encourages new investment in the area.
Retail Collapse?
Take a walk up Powell Street from the cable car turnaround on Market Street to Union Square. It’s a depressing experience. Blocks of once thriving retail are filled with For Lease signs. The one remaining thriving store, Sephora, had three off duty police officers guarding it last Friday evening.
While Union Square itself looks great and its ice skating rink is filled, the Powell Street corridor leading up from Market looks just like it did during COVID. Will those upscale stores ever return? Or are we going to start hearing talk about converting these sites to housing or schools as well?
Transit And Bike Lane Troubles
2023 was also a bad year for transit of all types. The loss of an estimated 150,000 daily commuters (the vast majority once working downtown) played havoc with BART and MUNI budgets. Fortunately, the Metropolitan Transportation Commission announced in late November that it will allocate sufficient funds to BART and MUNI so major service cuts are avoided until at least 2026. State Senator Scott Wiener is planning a major regional transit funding measure to avoid such cuts. So I guess you can say that the San Francisco transit crisis ended 2023 on a good note.
The same can’t be said for the city’s torturous approach to protected bike lanes. It’s another policy area where diminished expectations prevailed.
The year began with bike and walking enthusiasts savoring big ballot victories in November 2022 to keep JFK Drive in Golden Gate Park car-free. But these victories did not translate into the city aggressively expanding slow streets and bike lanes.
Instead, SFMTA did the impossible: it unified every constituency around the city’s bike lane plan for Valencia Street. Unfortunately, this unity was based on universal opposition to the center bike lane, whose problems have been well chronicled.
2023 showed again that San Francisco’s words about replicating the protected bike lanes and pedestrian-only blocks in European cities are not matched by actions.
Housing Progress
San Francisco saw little new housing in 2023. In February I explained why the city’s housing market was “dead.” I followed this up in October by describing why the passage of key state housing bills in 2023 would not impact San Francisco anytime soon.
A lot of attention has been paid to the Board of Supervisors’ response to the state mandate that San Francisco build a lot more housing. Fears that the city will fail to meet state deadlines to avoid the “Builder’s Remedy” have been overstated. Concerns raised by supervisors that the city lacks the funding to meet the Newsom administration’s affordable housing targets are valid. Notwithstanding this concern, the Board will meet the deadline.
The debate over state housing targets further highlights the longstanding conflict between a pro-housing mayor and a Board majority skeptical of market rate projects. But both sides agree that San Francisco needs more affordable housing. The Mayor and Board have put a $300 million affordable housing bond on the March 2024 ballot. Now the challenge is getting voters to pass a bond when they are discouraged and even angry about the state of San Francisco .
Recovery v Harm Reduction
Perhaps the best news coming out of San Francisco in 2023 was the increasing public support for a recovery-based strategy for addressing homelessness. The harm reduction model, which freely allows drug use and opposes mandated recovery services, does not work for many of the currently unhoused population. San Francisco needs to expand housing options to serve those seeking a sober living environment and recovery services. Forcing people leaving sober transitional facilities to live among drug users is not a strategic approach to either recovery or reducing homelessness.
Mayor Breed’s Treatment Reform March ballot measure is a good step toward shifting city resources toward recovery. I think most San Franciscans prefer spending resources on helping those trying to turn their lives around than a population that is content being drug addicts.
Overall, I’ve been involved in San Francisco politics since 1979. I’ve never heard people more discouraged about the future. Let’s hope our expectations are exceeded in 2024.
Randy Shaw
Randy Shaw is the Editor of Beyond Chron and the Director of San Francisco’s Tenderloin Housing Clinic, which publishes Beyond Chron. Shaw’s latest book is Generation Priced Out: Who Gets to Live in the New Urban America. He is the author of four prior books on activism, including The Activist’s Handbook: Winning Social Change in the 21st Century, and Beyond the Fields: Cesar Chavez, the UFW and the Struggle for Justice in the 21st Century. He is also the author of The Tenderloin: Sex, Crime and Resistance in the Heart of San Francisco
