Diversify or Die: San Francisco's Downtown Is a Wake-up Call

Though the pandemic is fading, people aren't coming back
By Newser Editors and Wire Services
Posted Jul 22, 2023 2:00 PM CDT
San Francisco's Downtown Is a Wake-up Call for Other Cities
A banner asking for support hangs outside the Sam's Cable Car Lounge near Union Square in San Francisco.   (AP Photo/Eric Risberg)

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%, reports the AP. A sign outside the lounge pleads: "We need your support!" 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. 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 US 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.

No longer the purview of office workers, downtowns must become around-the-clock destinations for people to congregate, says 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 says. "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. San Francisco leaders are taking the demise of downtown seriously.

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Supervisors recently relaxed 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. Marisa Rodriguez, CEO of the Union Square Alliance, says foot traffic is steadily up and a strong tourism season is expected. Sales tax revenue from restaurants and hotels is also up, says 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 Jessica Alba, and a rare sneaker shop. "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," Rodriguez says. "I just hope the noise settles quickly."

(More San Francisco stories.)

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