If IT Workers Stay Home, What Happens to 'the Most Empty Downtown in America'?

'Today San Francisco has what is perhaps the most deserted major downtown in America,' reports the New York Times. 'On any given week, office buildings are at about 40 percent of their prepandemic occupancy...'

[T]he vacancy rate has jumped to 24 percent from 5 percent since 2019. Occupancy of the city's offices is roughly 7 percentage points below that of those in the average major American city, according to Kastle, the building security firm.

More ominous for the city is that its downtown business district — the bedrock of its economy and tax base — revolves around a technology industry that is uniquely equipped and enthusiastic about letting workers stay home indefinitely. In the space of a few months, Jeremy Stoppelman, the chief executive of Yelp, went from running a company that was rooted in the city to vacating Yelp's longtime headquarters and allowing its roughly 4,400 employees to work from anywhere in their country.

'I feel like I've seen the future,' he said.

Decisions like that, played out across thousands of remote and hybrid work arrangements, have forced office owners and the businesses that rely on them to figure out what's next. This has made the San Francisco area something of a test case in the multibillion-dollar question of what the nation's central business districts will look like when an increased amount of business is done at home.... The city's chief economist, Ted Egan, has warned about a looming loss of tax revenue as vacancies pile up. Brokers have tried to counter that narrative by talking up a 'flight to quality' in which companies upgrade to higher-end space. Business groups and city leaders hope to recast the urban core as a more residential neighborhood built around people as well as businesses but leave out that office rents would probably have to plunge for those plans to be viable.

Below the surface of spin is a downtown that is trying to adapt to what amounts to a three-day workweek.... On Wednesdays, offices in San Francisco are at roughly 50 percent of their prepandemic levels; on Fridays, they're not even at 30 percent.... In a typical downturn, the turnaround is a fairly simple equation of rents falling far enough to attract new tenants and the economy improving fast enough to stimulate new demand. But now there's a more existential question of what the point of a city's downtown even is.

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