San Francisco Faces 'Doom Loop' from Office Workers Staying Home, Gutting Tax Ba...
source link: https://it.slashdot.org/story/23/04/01/2059224/san-francisco-faces-doom-loop-from-office-workers-staying-home-gutting-tax-base
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San Francisco Faces 'Doom Loop' from Office Workers Staying Home, Gutting Tax Base
Today a warning was published from the editorial board of the San Francisco Chronicle. "Experts say post-pandemic woes stemming from office workers staying home instead of commuting into the city could send San Francisco into a 'doom loop' that would gut its tax base, decimate fare-reliant regional transit systems like BART and trap it in an economic death spiral...."
Despite our housing crisis, it was years into the COVID pandemic before our leaders meaningfully questioned the logic of reserving some of the most prized real estate on Earth for fickle suburbanites and their cars. Downtown, after all, was San Francisco's golden goose. Companies in downtown offices accounted for 70% of San Francisco's pre-pandemic jobs and generated nearly 80% of its economic output, according to city economist Ted Egan. And so we wasted generous federal COVID emergency funds trying to bludgeon, cajole and pray for office workers to return downtown instead of planning for change. We're now staring down the consequences for that lack of vision.
The San Francisco metropolitan area's economic recovery from the pandemic ranked 24th out of the 25 largest regions in the U.S., besting only Baltimore, according to a report from the Bay Area Council Economic Institute. In the first quarter of 2023, San Francisco's office vacancy rate shot up to a record-high 29.4% — the biggest three-year increase of any U.S. city. The trend isn't likely to end anytime soon: In January, nearly 30% of San Francisco job openings were for hybrid or fully remote work, the highest share of the nation's 50 largest cities. Amid lower property, business and real estate transfer taxes, the city is projecting a $728 million deficit over the next two fiscal years. Transit ridership remains far below pre-pandemic levels. In January, downtown San Francisco BART stations had just 30% of the rider exits they did in 2019, according to a report from Egan's office. Many Bay Area transit agencies, including Muni, are rapidly approaching a fiscal cliff.
San Francisco isn't dead; as of March, it was home to an estimated 173 of the country's 655 companies valued at more than $1 billion. Tourism is beginning to rebound. And new census data shows that San Francisco's population loss is slowing, a sign its pandemic exodus may be coming to an end. But the city can't afford to wait idly for things to reach equilibrium again. It needs to evolve — quickly. Especially downtown. That means rebuilding the neighborhood's fabric, which won't be cheap or easy. Office-to-housing conversions are notoriously tricky and expensive. Demolishing non-historic commercial buildings that no longer serve a purpose in the post-pandemic world is all but banned. And, unlike New York after 9/11, San Francisco is a city that can't seem to stop getting in its own way.
So what's the solution? The CEO of the Bay Area Council suggests public-private partnerships that "could help shift downtown San Francisco's focus from tech — with employees now accustomed to working from home — to research and development, biotech, medical research and manufacturing, which all require in-person workers."
And last week San Francisco's mayor proposed more than 100 changes to streamline the permitting process for small businesses, and on Monday helped introduce legislation making it easier to convert office buildings to housing, expand pop-up business opportunities, and fill some empty storefronts. This follows a February executive order to speed housing construction. The editorial points out that "About 40% of office buildings in downtown San Francisco evaluated in a study would be good candidates for housing due to their physical characteristics and location and could be converted into approximately 11,200 units, according to research from SPUR and the Urban Land Institute San Francisco."
But without some action, the editorial's headline argues that "Downtown San Francisco is at risk of collapsing — and taking much of the Bay Area with it."
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The solution is to build housing in SF so workers don't need to "commute into the city." They can live in the city and pay taxes in the city whether they work from home or not.
Chance of this solution being implemented: 0%.
SF's revenue problem is caused by SF's mismanagement. They intentionally destroyed their own tax base.
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After seeing telecommuting pushed for so long as a solution to all sorts of modern life's issues, it is interesting to watch the rejection of it when we got a couple of years to try it out and decided we like it.
All sorts of entrenched interests with money want us to keep getting in cars and driving from suburbs to city cores every day, even though it's worse for humans who lose hours of their lives, harder on infrastructure, and burns more hydrocarbons.
We could be working on decentralizing - slowly disassembling our big cities and building more small cities / large towns. Big downtown business districts are about as necessary today as the old stock exchange trading floors.
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...about workers being bussed in? Well guess what motherfuckers, you got what you wanted. Enjoy your dilapidated downtowns.
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I always where a mask. No matter ware I'm going.
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I think one major issue is just how sudden this change was. Everyone thought this would happen eventually, but over many years if not decades.Then slowly the rate of office construction would slow as demand cools, some would be converted into housing, etc.
Instead it was basically overnight everyone who could, stayed home, and never came back. The forced "return to office" measures are stupid, but also, pretty understandable. You don't want cities to run out of money and then end up bulldozing everything dow
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You don't want cities to run out of money and then end up bulldozing everything downtown
Places like SF are so far away from that ever being a thing it's not worth worrying about. The issue isn't that people don't want to live in SF, it's that people don't want to live there at current prices.
There is a rather simple solution to that problem - drop the price. It's funny how that is apparently never an option when it comes to real estate.
If my skills become outdated, then I have to reprice myself at the new market rate. Nobody is going to care that I can't get the income I once could. The problem with real estate is that it is is part of a massive leveraged financial ponzi scheme. If the institutions that own these properties have to reprice them downwards, it is likely many of them will become insolvent, and we would have another GFC situation. You can already see this starting to happen with the SVB failure.
The irony of our neo-liberal financial system is that it has loaded everything up with so much multi-generational debt that our economy can't easily adapt to changes anymore. I mean, the whole creative-destruction thing is really the big benefit of capitalism. But instead we've created a finkncialised model that is always threatening to collapse anytime something changes.
Just look at how AI is terrifying everyone, when we should be celebrating entering an era where we are likely to see a huge increase in productivity - i.e. more stuff for less working hours.
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The large property owners don't want to lower prices because they can claim the high valuation on their assets to get more financing . Your average homeowners will fight tooth and nail to avoid their McMansion depreciating.
So this will keep going until everything collapses and turned into parking lots or gets bailed out.
But yeah overall agreed completely.
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California bubble is too big for that. If you pop it some people will lose everything. Not even hyperbole, people are all in and then some on their property.
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Let them. That's what bankruptcy is for.
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It happened suddenly, in part, because the same myopic leaders and old money fought so long to avoid giving even a fraction of an inch. If not for that, we would have been well along the way to WFH before anyone even heard of COVID.
We're starting to see part two. For years, the money has been 'globalizing' to get cheap labor, then tacking on HUGE mark-ups because they could. Now consumers are (based on lack of a choice) globalizing by getting cheap goods that skip the big mark-ups. The executive suite is be
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That's kid of exactly what the OP wasn't talking about.
He was talking about mixed use city centres where people live and work nearby, not live miles out and then all commute in by car. That's not a terrible idea. Many people don't want to live in the arse end of nowhere, and never interact with anyone physically day to day.
You could never tempt me to the American 'burbs with or without a commute.
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I said this for 25 years and then crime and politics sent me packing.
10 years in the burbs, I would never ever move back into a big city.
And it has nothing to do with me being old. Even young adults out here are cooler and more refined and less chaotic.
You can keep your urban planned ghettos.
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There is politics in the burbs, you just don't see it. Financially they are unsustainable in their own and the city you so despise is actually subsidising your lifestyle. Either way, you are now fully dependent on a car to do anything. You can keep that personal hell.
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It's true that big city has been supporting the burbs... because the city is where the jobs have been and the burbs are where those people have gone to sleep at night.
We don't need that to remain true any longer. There's still a need for hubs, but not at the current scale. Plenty of jobs can be done remotely now, and refusing to do so just to prop up the old paradigm is myopic in the extreme.
Your home can also have your office cubicle in it, and you'll probably have a nicer cubicle than you would 'downtow
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It's not the arse end of nowhere. It's a community of like-minded people. Where the political autocrats have not yet been able to get their nose under our tent and start telling us how to live our lives.
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"After seeing telecommuting pushed for so long as a solution to all sorts of modern life's issues, it is interesting to watch the rejection of it when we got a couple of years to try it out and decided we like it"
There's also the issue of the failures of global supply chains which were long touted as everything for everyone anytime, anywhere on demand and one pandemic & one sideways tanker showed just how fragile & inefficient the global village can be -
"Working from home in the suburbs", ow would that effect the tax base, people still live and pay taxes in sf, unless said suburbs has grown so much they actually overspill SFs city limits.
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Big cities were more efficient, then the digital and telecommunications revolutions happened and the big city approach starts to look expensive and inelegant by comparison.
Time's up for the city in the form of an over-grown office park.
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That sounds like a neat idea, but, if we consider tax receipts are the goal, that the wrong direction.
Let's say a worker in the city occupies "X" amount of space, a residential unit for the same worker would *easily* be 10x larger.
By working in the city at a desk/office, the city collects a certain amount of wage taxes, call it "W", and you can fit a number of workers defined as Available Space divided by X, giving you the number of workers the city can accommodate.
If the worker lives in the city, they now
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Not only that, but the revenue generated by someone living in an area is not the same as from someone working in an area. When I live there, my chance of going out to eat is far lower than when I work there, simply because at home, I have the facilities to cook my meals, something few people have at work, so their only option is actually go to out to lunch somewhere.
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I've a friend who has been instructed by his local council employer to go into work 2 days a week to support the local economy round the office. He brings in sandwiches. Apart from car polluting the air his presence makes no difference to the town.
OK - that's obviously an extreme case. There are shops that are dependent on rich commuters spending money because their office is there. The pandemic has turbo charged the move to working from home that was already happening a little. Trying to protect the econom
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You can rest assured that if I get forced into an office, I will make certain not not have a positive impact on the economy around the office, if only out of spite. And I'm for sure not the only one.
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First of all I don't think the goal is just tax receipts, but also supporting an actual local economy. Even if you do cram 10 cubicles in the space of one apartment, do they really contribute more tax and economic activities than a family living there? An office worker, from what I've seen, will just drive to the office, sit there for 8 hours, maybe spend $15 on lunch and drive home. The other 16 hours everything is empty. Which isn't how a resident spend their time in the city.
The whole thing also apparent
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How about asking a more fundamental question, why are there taxes there in the first place, can a city exist, function completely without government that is funded by taxes? It can, though it is still too early for this to happen there because there is a government that will fight tooth and nail against the reality setting in. A city based on complete private ownership and operation would be making only market driven (profit driven) decisions, that would be rational and would solve the question of what is
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> can a city exist, function completely without government that is funded by taxes? It can,
Welcome to slab city... enjoy your stab life style: https://en.wikipedia.org/wiki/... [wikipedia.org]
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If I remember correctly, a documentary on Slab City revealed that there are groups of viglantes who enforce certain rules whilst county authorities also do intervene occasionally, particularly in child protection cases.
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Feel free to move into Elon's company town.
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If Comcast owned roads, it would be a $400/month subscription with advertised speeds of 80mph but when it came time to go somewhere somehow the speed available never hit 30.
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Ah an anarchist. Please, you first. Move somewhere with zero government and zero laws. But ittll be somewhere far, FAR away from me because Ill vote against it and if the anarchists win Ill be instantly gone. Then I can watch your flaming dumpster fire from a safe distance.
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This, but: convert empty office space into affordable housing.
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Nice idea, but the renovation and permitting costs are generally as much as building a new building on the same site.
And with SanFran politics being what they are...dream on.
And with California politics being what they are...good luck finding a developer that wants to make that effort.
And with employment rates being as tight as they are for the skilled trades required in the construction industry...they might stick to "slap 'em up" wood-frame and "stand 'em up" pre-form construction stuff.
FYI - There are no
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Ah, well. Somebody said "that'll never work". So I guess do nothing.
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No way the powerful lobby representing the greedy bay-area landlords is going to allow more housing to be built in the area (which would put downward pressure on rents and prices and loose them money)
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Exactly this... Just because someone's job prevents them working remotely, doesn't mean they're going to want to waste a huge proportion of their lives commuting. If they can live and work within a short distance that's better for everyone.
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I am pretty sure they already have a solution under consideration.
They want to pay black people $5 million each.
https://www.nbcnews.com/news/n... [nbcnews.com]
If nobody leaves. This will cost $600,000 per person.
That should solve the housing problem
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The council area is too small, it prevents diversity and significantly hampers the potential solution to problems.
The entire greater bay area should be one very significant council. That would lead to holistic solutions around where people live, work and play. You could get coherent planning decisions for things like housing encompassing the whole area, SF, Daly City and all.
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I think it's more a question of density. Office workers typically just need an office (or cubicle) in terms of personalized work space. And it makes sense for all the offices to cram together in a single downtown because potential employees will have chosen their living arrangements so they could commute to downtown.
On the other hand, people want more space to live in. If you're willing to stay in a small apartment you can live downtown close to where you work. But if you want a house with a yard... well th
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No one wants a long commute. However, lots of people crave density. It's not so much the density per se, but density supports a vibrant economy, pulling in a diversity of restaurants, stores, arts, parks, museums, etc., which in turn pulls in young people, artists, immigrants, etc. There's a reason that Manhattan attracts so many people.
Affordable housing is an issue, but it's not the primary issue. The problem is people wanting to be in the city, whether to work, live, or visit. That's the difference
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I think you misunderstand the problem.
Many many companies would leap at the chance to build housing in SF.
The problem is that the government refuses to grant them permits to build... because that is what voters want. Voters want their property values to continue to appreciate, and the best way to achieve that is to constrict the housing supply.
The same NIMBYism affects most other coastal cities.
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IIRC Google tried to do exactly that -- build employee housing on property they already owned, and the city refused to allow it. And this was after they were already protesting Google busing its own workers in.
They got exactly what they were asking for all along, and now they're crying a river because their wish came true.
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Google tried to build housing that basically turned you into an indentured servant. Imagine wanting to leave your job and being kicked out of your house. Imagine not getting a raise or taking a pay cut but you need to keep your housing so you just put up with it.
Google wanted control.
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I think you misunderstand the problem.
Many many companies would leap at the chance to build housing in SF.
The problem is that the government refuses to grant them permits to build... because that is what voters want. Voters want their property values to continue to appreciate, and the best way to achieve that is to constrict the housing supply.
The same NIMBYism affects most other coastal cities.
The focus on NIMBY misses the key problem, that housing is a market and is in many ways a zero-sum game. Affordable housing means buyers paying less and seller receiving less. That's great for the buyers and bad for the sellers. It's easy to pile on faceless rich people, but a lot of these people are families and seniors who have much of their life savings locked up in their homes. This also isn't just a generation battle of boomers versus young people because many young homeowners would also be crushed with a housing price drop.
The problem is having to pick winners and losers, and the only way to solve the problem is by breaking the zero-sum nature of the market.
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You've just agreed with me and the grand-parent post: People want to profit from owning a house. If retirees want to move, they can move to a suburb where the value of housing is the same as their own street: Government shouldn't be manipulating house prices to benefit a minority. As retirees, they've probably spent several years in the house and even a depressed market will price the house as more valuable than the purchase price they paid: This is everyone demanding the double-digit inflation continu
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Wrong. The entire point of the thread is building NEW housing and for that it’s profit margins and quantity sold which is more money for more homes, the cost each has much less to do with it. Further, sellers profit off of the margins as well, in my city the LOWEST price houses went up 400% and the top 10% most expensive houses about 20% during the same timeframe and that’s not unusual - it’s far more profitable to purchase the cheap homes and hold those.
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They absolutely benefit from it and will fight tooth and nail to keep property prices going up. Everyone who's bought into real estate and views it as an investment will, it's just not compatible with affordable housing.
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Not much room to build housing in San Francisco. Have to build up, and that means tearing down existing housing.
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Really, where? I'd like to go to there. Housing prices are through the fucking roof almost everywhere that isn't a dirt-poor half-empty village in the middle of nowhere in Croatia or Sicily or something like that.
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Europe has many other problems, but it depends on which country you live in.
The best comparison to SF would be Paris, a city that is even more expensive to live in, smells like piss on a good day, and is currently dealing with massive strikes by city labor.
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Well, contribute to society... there's worse things. Like, say, a mob of bums roaming the town because they literally got NOTHING to lose anymore. There's a reason we have social peace over here: We basically pay off our bums to stay out of our hair.
Still, a billion is an insane amount of money for a city of less than a million. You might want to check whether that money doesn't find pockets that have little to do with bribing bums to stay calm.
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Outta where? I've been over here for a very long time now, I wouldn't want to hang dead over a picket fence in the US anymore.
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They build the jobs where people are, then the people move. Downtowns are the way they are because more people used to live downtown. When people migrated to suburbs, then lots of newer companies also formed nearer to the suburbs. But it's not like this is all Legos and you can just redesign it all over night, it takes many decades usually for these changes.
Also note, many many people live in San Francisco. Just not many of them in the high economic industries, like finance or content creation (I hate to
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Inexpensive to renovate?? I don't know how things are in the us, but , at lleast here in norway, it geets rather expensive rather quicly eny time you need t get people in. Not everybody has the skills or incarnation to take on renovations themselves and even if they do materials are not exactly cheep anymore.
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