While muddled by a typical holiday slowdown at the end of the year, the impact of the Omicron variant on return to office plans (as measured by office attendance, which dropped back under 20 percent) and tourism in San Francisco (as measured by hotel occupancy, which dropped back under 30 percent) is evident in the City’s latest Re-Opening Report.
In addition, while the Office of Economic Analysis’s January report highlights that “Amid Omicron, 5,700 Jobs [were] Added in December,” it’s important to understand that the State’s employment reports reflect data through the middle of each reported month. In other words, the December employment report and job gain, which the Office of Economic Analysis is quoting, wasn’t actually “amid Omicron” but prior to Omicron’s surge.
The actual impact of the Omicron surge on employment will be reflected in the January and February jobs reports. And as we outlined earlier this month, while the office vacancy rate in San Francisco inched down at the end of 2021, the amount of un-leased space actually ticked up, and total leasing activity dropped from the third to fourth quarter of the year, key trends which shouldn’t catch any plugged-in readers by surprise.
Politicians and news media in SF love to pat themselves on the back for a job well done on Covid. And sure, they deserve it. But at what cost? AUSTIN, TEXAS has taken over SF as a more vibrant city — at least in the present. So sad. And it doesn’t seem to be getting better.
Instead of comparing case/death rates between cities, we need a more holistic measurement to take into account all factors that make up a vibrant society. We did well on cases/deaths. Failed miserably on EVERY other aspect.
This is silly. SF chose its path and Austin chose its path. People who were fed up with SF’s path moved to Austin … end of story.
Many of us are quite happy with not going in to office every single day – even at the expense of office vacancies. ALSO, many of us are really happy about this so called exodus. There really is no reason for SF to continue to be the most expensive city in the country. I would not call the financial district “vibrant” even pre covid. yes there are people there between the hours of 730 – 6 … and then they go home.
But it goes beyond “going into the office”… although more arts and entertainment venues are open now than in April, 2020, a lot of others have died, and the ones that are open are still restricted in numbers and ability to present art / shows. In summer 2020, I regularly heard the argument “why do we live here [in SF]”, paying high rents, when (absent its arts and restaurant scene) San Francisco had become culturally equivalent to Des Moines. (No offense to the Iowa city; I was in fact born there). So I see O.P.’s point as being that the raw stats of office vacancies and case numbers don’t paint the full picture of how a city has responded overall to the pandemic. I’ve crossed the country twice in the last 9 months, and I found Phoenix, Santa Fe, Boston, and Phoenix (yes, even Phoenix) to be more enjoyable, dynamic, and upbeat places to be than San Francisco. We may have kept case numbers down (and gutted the FiDi in the process), but at what overall cultural and economic cost?
SF needed desperately to add more housing to downtown. of course its dead without people going to offices, because not enough people live there to support businesses
Agreed – look at DTLA, so incredibly different than it was just 20 years ago (and that despite having wide “freeway streets” and other infrastructure not really geared towards walkability). And yet SF (gov’t, and residents) will come out in opposition to something like Hines’ proposal to build a huge residential tower downtown…
How about converting some of old FiDI office buildings to residential use? These buildings are smaller and lend themselves better to conversion. The old FiDi is pretty much empty at street level but convert a chunk of these buildings and voila! It’s a much faster process than permitting/building new residential towers. Not to mention it would cut into the amount of vacant office space.
Conversions are possible but not ideal, since office floorplates don’t always lend themselves to reasonable residential layouts. For reference check out some of the floorplans for 100 Van Ness, which was similarly converted: lots of tunnel-like junior 1 bedrooms.
* should have said Chicago, Santa Fe, Boston, and Phoenix
Austin didn’t choose a path. Gov Abbott imposed a path on all of Texas.
I wonder what the “office attendance” – gee! can’t we find a better term?? – in SF proper is…my assumption being that suburban offices have had higher return rates since they’re less likely to be accessed by public transit, which people continue to avoid (tho the usage is close to the return rate, so perhaps that isn’t the case).
People have a weird hate boner for SF. It comes off as an envy boner sometimes.
That aside, it does seem like compliance is dropping in SF, as noted in other publications, this might be the last wave where people still keep up social distancing and what not. Time will tell I guess.
My roommate is / was an avid covidphobe, adhering to every letter of the covid distancing and protection rules. And after almost 2 years, even she says she’s done; when the omicron wave is over, she says she’s getting on with life because she can’t keep sacrificing and crimping (and incurring the mental and emotional damage that’s arisen from that). Anecdotal, but I’ve heard the same from several other people, so I think your supposition is correct.
I think this is a common sentiment. Covid’s not done with us but we’re done with covid. What I don’t understand is how people are just binary about it. It’s not all or nothing but emotionally that seems to be the way people are going. You can do more, open up more etc but still choose when to wear a good mask, an okay mask, go unmasked etc.
SF vs Austin aside, it’s interesting comparing us to other countries. It’s obviously unfair to compare us to a small island country like New Zealand. And none of us would take the authoritarian rule and China’s draconian zero covid policies to get that result (and ultimately it seems that they will have a hard time holding back omicron). But it’s interesting to look at death rates a in a country like S. Korea which got the vaccines much later than us- but they didn’t shut down and instead just masked, contact traced, social distanced. They stayed open, their GDP was barely touched, and through following basic measures, the death rate per capita was dramatically lower. Somehow we have managed to maximize both death and economic shutdown.
From a virus evolution standpoint, it makes sense that variants that outcompete and takeover are more transmissible as BA.2 seems to be doing in many places like Denmark. But there is nothing to say that the virus becomes less virulent over time. We were lucky with omicron that it was somewhat less virulent and that (especially boosted) vaccinated people generally have excellent protection. Really hoping that we continue towards being less virulent but that is partially luck. Also, it is worth pointing out that the 7-day MA of deaths in the US has been roughly around 2500-3000 while unfortunately we have set some record days over 3000 recently.
I think it is pretty much binary: just as people either wear seat-belts all the time, or not at all, long-term I see mask wearing the same way: no one is going to say “OK, I’ll wear one Monday, Wednesday or Friday” or even “OK, It’s a big crowd, so I’ll wear one…”
As much as shades of distinction make sense, the subtlety is lost on the American public: witness the fanaticism of the idea of “Zero-tolerance”.
Disagree. I went to a couple of indoor events prior to the latest surge, not going to another until the numbers come back down. Regularly dine outdoors but only at restaurants with decent spacing between tables and staff that enforce the rules; won’t dine indoors until the numbers drop. Had stopped masking outdoors but back to wearing one at farmers markets or in similar crowds. Also upgraded from a good cloth mask to an N95 with the latest surge.
I shut down my office for good after not missing it. My lease ran out about 8 months into the pandemic, the end was (and is) nowhere in sight and so I just shut it down for good. Attrition will be replaced with people outside California at significantly lower cost. I’m saving a ton of money and the tools to deal with remote work are better than ever, and will continue to improve
Not every business owner will feel this way, but because of the cost savings, they’ll be undercut by people like me, so I wish them lots of luck.
The SF real estate boosters will be on here as always telling us that everything will be back to normal soon (the original stay at home order was for 2 weeks. How’d that work out? Coming up on 2 years and no end in sight) so that they can unload something they overpaid for 3 years ago, but that will shake itself out soon enough.
As for the people who are just tired of it and will want to blow off any restrictions, good luck with that. One of my employees had it 4 weeks ago and he figured he was immune so he threw caution to the wind and he has it again. He’ll learn soon enough that this is stronger than he is and his attitude will change
Well “it” is pretty much endemic now, and it’s (hopefully!) going to evolve into a flu-like illness. Some people will get it seasonally, and some won’t, but it will be much less dangerous (as omicron has been shown to be, at least for those who are vaccinated) and life will go on – as it must.
Endemic? Not quite, less than 40% of US over 65 are boostered.
Hmm, it’s a different structure than the flu. But the way a virus evolves will be about survivability and random chance. Two important factors in one strain “outcompeting” another are (1) being more virulent / contagious so they spread faster, or (2) being better at evading the immunity CURRENTLY present in the population. Whether it severely harms / kills the host is mostly unrelated to those characteristics, except indirectly—for example, if it becomes much more deadly it might provoke us to step up our suppression efforts until a less deadly strain coaxes us back to complacency.
So really, there may be swings but our society has so far made the decisions that set the equilibrium, which I think right now does look like the flu, since that’s what we’ve been “tolerating” for decades now. That said .. having two endemic flus that are roughly as deadly may essentially permanently double the global death rate from such disease—I’d argue that’s an outcome worth investing in trying to avoid?
SF’s lag in recovering from the Covid induced slowdown compared to other cities was featured in a recent SF Business Times interview with Clint Reilly. Mr. Reilly said we need to fill up the offices again to bring downtown business and street life back. Far easier said than done. His failure to grasp the paradigm shift going on was surprising to me given he owns a lot of downtown office space.
As to office space, 60% of Austin’s workers have returned to their downtown offices. In SF that number is between 30% and 35%. An SF report predicted that 15% of workers will not return as they shift to permanent telework. I think that number is optimistic and it’s more likely to be 25% who don’t return. SF business taxes are expected to be flat this year. All those small downtown restaurants and shops will not come back in the numbers that existed pre-pandemic as the number of workers downtown will not recover to its peak level.
Developers see this. Boston Properties will not build office projects in SF for the foreseeable future even as they move forward with large projects on the Peninsula and in the East Bay. What that means for their huge Bryant Street project remains to be seen. Will they put their entitlement up for sale? This at a time when a slew of office projects have been proposed for Oakland and a huge number of projects for the Peninsula. Alexandria just purchased most of the Tanforan Shopping Center site and plans 2 million feet of office space there – space largely targeted toward SF companies that want to relocate away from downtown. As some note, folks have soured on public transportation which gives the Peninsula a big advantage over SF. Easy car access and lots of parking.
Add to that the hotel industry and its failure to recover. Rooms rates in SF are just 50% of pre-pandemic levels while in Phoenix, San Diego and Seattle they are getting close to their pre-pandemic levels. Domestic airport passenger traffic is near its pre-covid level in Phoenix and Denver, 80% in LA and Seattle but just 60% at SFO,
The pandemic has been a catalyst to speed the change that was coming to SF. For many reasons discussed at this site SF was in a gradual decline before the pandemic. That decline has accelerated, and the million-dollar question is what becomes of the 18 million feet of empty office space? Space BTW that is continuing to empty – DropBox recently gave up its remaining space at The Exchange as it exits SF in favor of a dispersed workforce many whom will be permanently teleworkers.
As some note, folks have soured on public transportation which gives the Peninsula a big advantage over SF. Easy car access and lots of parking.
I mean, parking’s one issue. Traffic is another. Two million square feet of office space is what– an additional 10,000 workers? If each one drives, that requires a freeway lane at full capacity for four and a half hours every morning. Do Peninsula roads really have the extra capacity to absorb this?
It’s been noted that while office occupancy is far from recovered, and transit use is far from recovered, traffic is already just as bad as it ever was. Which makes sense: you can cut the number of commuters in half, but if people who used to take transit now drive, traffic will be just as bad. It’s not like the freeways will suddenly have a bunch of spare capacity, even if downtown SF remains a ghost town.
Some people argue that it doesn’t matter because once all the office jobs are in the suburbs, they’ll be “near” where people live, and so they’ll drive but won’t drive very far. This doesn’t make much sense to me either– if people were willing to relocate near their jobs, we’d already have solved the traffic problem. Suburbs are low-density, which means that people, on average, have to travel further to get to the same number of jobs as they would find in a city center. Is Tanforan more accessible than downtown SF to a driver living in San Bruno? Sure. To the other 90% of the Bay Area? The best real-world example is probably LA, and it’s not great.
Of course, Tanforan is a pretty good location… because it does have a BART station. If they also build a few million square feet of parking for people to drive there, people will surely take advantage of that, at the expense of Bay Area traffic being even worse. But that doesn’t mean it won’t be successful– after all, it has a BART station, and Caltrain’s not far either. Could turn into a nice downtown. Assuming people stop being soured on public transportation.
And, of course, what does become of those 18 million square feet of office space? Will it just stay empty forever? Or will it become cheaper as landlords adjust to the new realities? And when it becomes cheaper, what does that mean for brand-new 2-million square foot projects?
At Tanforan El Camino has 3/4 lanes in either direction. Very easy access to 280 and 101. Not to mention CalTrain and BART being there. Not far from Tanforan on El Camino another 1-million-foot office project is set to be built. Just across the street from the See’s candy factory. Burlingame and Millbrae are seeing new projects. In SSF/Brisbane 12 million plus feet of space is planned – mostly biotech.
Tens of thousands of new jobs will be created in the north Peninsula this decade. The Peninsular must not make the mistake SF made – build millions of feet of office space with no commensurate new housing construction. The Peninsula PTB are aware of this and are encouraging new residential construction. El Camino with its strip malls and one- and two-story commercial structures is ripe for transformation into not just an office corridor but a medium density residential corridor. A number of handsome medium density residential structures have been there in recent years but many, many more are needed.
Speaking of public transportation, if another BART tube is ever built it should run from Oakland through Alameda to the Millbrae/Burlingame area to support the emerging north Peninsula jobs center.
On creating residential units out of El Camino strip malls, Fast Company just published on this topic.
Or closer to home: The Master Plan to Transform Stonestown into a Neighborhood. But there’s a world of difference between converting a strip/shopping mall site and an office tower.
“Rooms rates in SF are just 50% of pre-pandemic levels while in Phoenix, San Diego and Seattle they are getting close to their pre-pandemic levels.”
Yeah, sure they are Seattle Dave.
Man. You come on this website and you tell whoppers huh? That’s what you do. Nice hobby bro.
From SF Business Times and the Examiner:
Prior to the pandemic, San Francisco typically had about 80% of its hotel rooms filled. In December, that was down to 40%, which represents a drop from the pandemic-era peak of 50% in July, when vaccines were rolling out and troubling variants had yet to emerge. Average room rates have dropped from $300 per night pre-pandemic to nearer $175 recently, the controller reported. Room rates in cities like Phoenix and San Diego have recovered to nearly their early 2020 levels.
So your counter argument is to cherry pick December 2021, a month of low hotel occupancy that this year had omicron. Yet your point was much broader as shown. You’re fraudulent, Dave (Seattle dude). Give it a rest. Seattle is nearly lock step with SF on all these matters and your odd lying hobby on Socketsite is a laugh.
LMAO, The Examiner? Yeah, that is really a reputable news source.
December and the Winter months have traditionally been a slow month for hotels. The only major conference for that timeline is the JP Morgan health care in January but the omnicron variant put a stop to that. Phoenix and San Diego are Winter destinations for the snow birds and others. Make sense they are holding their own.
Look dude, you are entitled to your opinion but that is all it is, an opinion. No one knows how the future will pan out. I’m a long term optimist so come back in 5 years and we will see where we are.
We’re guessing that Dave is (mis)quoting relative RevPAR figures, which stand at under 60 percent of pre-pandemic levels for San Francisco, but closer to 80 percent for Seattle, and over 100 percent for Phoenix and San Diego, and have been misreported as “rates” by others.
Yes. Mea culpa. Thanks for the correction.
Harder-hit markets like San Francisco and New York, with RevPAR still down 61% and 56%, respectively, compared with 2019, may benefit more in 2022.
One may either despair at the first part of this quote, or take solace at the last, but honestly, I think most people read this site for info about the Bay Area, not the Sound Area.
tourism in San Francisco (as measured by hotel occupancy, which dropped back under 30 percent) is evident in the City’s latest Re-Opening Report… Stupid. People needed to use hotels because there is a housing crisis in San Francisco and everyone jammed packed together in homes and streets needed refuge from the virus.
On Feb 16th 2022 masks will be optional in San Francisco.
UPDATE: The Re-Opening of San Francisco’s Economy, February Report