[Head banger...] Diversify or die: San Francisco's downtown is a wake-up call for other cities

[Leroy N. Soetoro]

https://news.yahoo.com/diversify-die-san-francisco-downtown-081502182.html

SAN FRANCISCO (AP) — Jack Mogannam, manager of Sam’s Cable Car Lounge in
downtown San Francisco, relishes the days when his bar stayed open past
midnight every night, welcoming crowds that jostled on the streets, bar
hopped, window browsed or just took in the night air.

He's had to drastically curtail those hours because of diminished foot
traffic, and business is down 30%. A sign outside the lounge pleads: “We
need your support!”

“I’d stand outside my bar at 10 p.m. and look, it would be like a party on
the street,” Mogannam said. “Now you see, like, six people on the street
up and down the block. It’s a ghost town.”

After a three-year exile, the pandemic now fading from view, the expected
crowds and electric ambience of downtown have not returned.

Empty storefronts dot the streets. Large “going out of business” signs
hang in windows. Uniqlo, Nordstrom Rack and Anthropologie are gone. Last
month, the owner of Westfield San Francisco Centre, a fixture for more
than 20 years, said it was handing the mall back to its lender, citing
declining sales and foot traffic. The owner of two towering hotels,
including a Hilton, did the same.

Shampoo, toothpaste and other toiletries are locked up at downtown
pharmacies. And armed robbers recently hit a Gucci store in broad
daylight.

San Francisco has become the prime example of what downtowns shouldn't
look like: vacant, crime-ridden and in various stages of decay. But in
truth, it's just one of many cities across the U.S. whose downtowns are
reckoning with a post-pandemic wake-up call: diversify or die.

As the pandemic bore down in early 2020, it drove people out of city
centers and boosted shopping and dining in residential neighborhoods and
nearby suburbs as workers stayed closer to home. Those habits seem poised
to stay.

No longer the purview of office workers, downtowns must become around-the-
clock destinations for people to congregate, said Richard Florida, a
specialist in city planning at the University of Toronto.

“They’re no longer central business districts. They’re centers of
innovation, of entertainment, of recreation,” he said. “The faster places
realize that, the better.”

Data bears out that San Francisco’s downtown is having a harder time than
most. A study of 63 North American downtowns by the University of Toronto
ranked the city dead last in a return to pre-pandemic activity, garnering
only 32% of its 2019 traffic.

Hotel revenues are stuck at 73% of pre-pandemic levels, weekly office
attendance remains below 50% and commuter rail travel to downtown is at
33%, according to a recent economic report by the city.

Office vacancy rates in San Francisco were 24.8% in the first quarter,
more than five times higher than pre-pandemic levels and well above the
average rate of 18.5% for the nation’s top 10 cities, according to CBRE, a
commercial real estate services company.

Why? San Francisco relied heavily on international tourism and its tech
workforce, both of which disappeared during the pandemic.

But other major cities including Portland and Seattle, which also rely on
tech workers, are struggling with similar declines, according to the
downtown recovery study, which used anonymized mobile phone data to
analyze downtown activity patterns from before the pandemic and between
March and May of this year.

In Chicago, which ranked 45th in the study, major retailers like AT&T, Old
Navy and Banana Republic on the Magnificent Mile have closed or soon will
as visitor foot traffic hasn’t rebounded.

And midwestern cities like Indianapolis and Cleveland already struggled
pre-pandemic with diminished downtowns as they relied on a single industry
to support them and lacked booming industries like tech, said Karen
Chapple, director of the School of Cities at the University of Toronto and
author of the study.

San Francisco leaders are taking the demise of downtown seriously.
Supervisors recently relaxed downtown zoning rules to allow mixed-use
spaces: offices and services on upper floors and entertainment and pop-up
shops on the ground floor. Legislation also reduces red tape to facilitate
converting existing office space into housing.

Mayor London Breed recently announced $6 million to upgrade a three-block
stretch by a popular cable car turnaround to improve walkability and lure
back businesses.

But Marc Benioff, chief executive officer of Salesforce, the city’s
largest employer and anchor tenant in its tallest skyscraper, said
downtown is “never going back to the way it was” when it comes to workers
commuting in each day. He advised Breed to convert office space into
housing and hire more police to give visitors a sense of safety.

“We need to rebalance downtown,” Benioff said.

Downtown housing has been the key to success in Baltimore and Salt Lake
City, Chapple said.

Real estate experts also point to office-to-housing conversions as a
potential lifeline. Cities such as New York and Pittsburgh are offering
sizeable tax breaks for developers to spur such conversions.

But for many cities, including San Francisco, it will take more than
housing for downtowns to flourish.

Daud Shuja, owner and designer of Franco Uomo, a luxury clothier based in
San Jose, said new customers who live in San Francisco drive at least an
hour to the store. He plans to open a shop in a more convenient location
in suburban Palo Alto next year.

“They just don’t want to deal with the homelessness, with the environment,
with the ambience,” he said.

Still, San Francisco officials say the downtown, which stretches from City
Hall to the Embarcadero Waterfront and encompasses the Financial District
and parts of the South of Market neighborhood, is in transition.

Gap, which started in San Francisco in 1969, closed its flagship Gap and
Old Navy stores near Union Square. But the company isn't abandoning the
city entirely, planning four new stores from its major brands at its
headquarters near the waterfront and anticipating other new stores.

Marisa Rodriguez, CEO of the Union Square Alliance, said foot traffic is
steadily up and a strong tourism season is expected. Sales tax revenue
from fine and casual dining, as well as hotels and motels, is also up,
said Ted Egan, the city's chief economist, defying the narrative that San
Francisco is in a doom loop.

Furthermore, new Union Square businesses include upscale fusion
restaurants, a hot yoga studio favored by celebrity Jessica Alba and a
rare sneaker shop. The area just has to overcome hesitation from local and
national visitors due to negative press, Rodriguez said.

“When you’re making your plans to travel, and you’re like, ‘I’ve always
wanted to go to San Francisco, but I just keep reading all this stuff.’
When in fact, it’s beautiful. It’s here to welcome you,” she said. “I just
hope the noise settles quickly.”

David
16 July, 2023

Diversification doesn't mean diddley if the defunded police can't deal
with crime and there are homeless on the sidewalks driving away business.
Far too many businesses have already left San Francisco because of issues
related to shoplifting, aggressive panhandling, people using drugs or
relieving themselves on the sidewalks, slow police response times,
excessively high rent for both stores as well as employees, and high tax
rates.

Scott
16 July, 2023

SF is one of the most liberal major cities in the US. As such, it has
embraced diversification for decades, and it's not working. To suggest
that SF needs more "diversification" to dig itself out of its current
death spiral is laughable and consistent with the textbook liberal
response to its failed policies: "we just need more..." Diversification
and other failed liberal policies are what got SF to this point to begin
with, SF does not need more.


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