Spend any time in New York and you will feel it. Manhattan and Brooklyn are bustling with activity. It’s electrifying to be here after years of being relatively locked up.
The question, and the one posed this week by the San Francisco Chronicle, is why San Francisco isn’t bouncing back the same way.
As journalist Roland Li writes: “There has always been a disparity – New York has 10 times the population of San Francisco – but coastal tourism and economic centers have diverged starkly as they recover from the pandemic.”
Consider, Li writes, that while construction of major commercial real estate projects in Manhattan has been completed during the pandemic — and while much of this new office space is almost fully leased — in San Francisco, the projects are on point. dead and many existing buildings are struggling to find tenants.
One possible way to fill these buildings is to convert them into housing. Wall Street, Li observes, has been doing just that for decades. But whereas in New York there is a clear demand for housing, with rents hitting record highs even now, in San Francisco it is not as clear that enough people would be renting – at this precise moment – converted offices, even if they have been made available.
According to an article in The Real Deal today, new data released by business research firm Yardi indicates that San Francisco is currently the least competitive housing market in all of California, with just seven potential tenants per vacant apartment, compared to double that number in neighboring Silicon Valley and the East Bay.
All is not bleak for San Francisco. Yardi’s research indicates that the city’s occupancy rate rose to 93% in the second quarter from 89% a year earlier. In addition, the apartments were rented eight days faster, an average of 41 days.
Still, work-from-home policies are clearly having a major impact on where people live, and many Bay Area employees who might flee the region’s high prices have done so. (California — led by San Francisco, and followed by Los Angeles — lost more than 352,000 people between April 2020 and January 2022, according to California Department of Finance statistics.)
Indeed, in his article, Li partly draws a line between “discordant crowds” on the streets of New York City until April last year, when then-mayor Bill de Blasio announced that city employees would soon return to the office, a decision quickly followed by private companies.
Called back by employers, New Yorkers who left during the pandemic suddenly found themselves looking for accommodation, if only to spend just two or three days in the office.
The gambit continues to work, apparently. The Partnership for New York City, which says it surveyed more than 160 employers over a two-week period in late April and early May, found that 38% of their Manhattan employees are now back in the office on the average weekday, while that 28% are entirely distant. Meanwhile, average attendance is expected to reach 49% next month.
This does not mean that the employees are back full time. They may never be, given that even the most vocal critics of remote work have been forced to soften their stance, including JPMorgan Chase CEO Jamie Dimon. As Bloomberg reported in May, Dimon told shareholders in an April letter that working from home will “become more permanent in corporate America” and estimated that about 40% of its 270,000 employees would work under a hybrid model. Shortly after, a senior technology executive at the bank told some teams they could spend two days instead of three days in the office if they wanted, based on internal feedback.
Those two to three days a week could save New York City, and maybe it’s time more San Francisco employers consider doing the same. Small businesses in San Francisco are increasingly desperate for economic activity; even if civic duty isn’t a priority for local tech companies, there’s still a strong argument that hybrid environments allow employees to enjoy better work-life balance, more camaraderie with co-workers and also to advance in their career.
As for those who might blame San Francisco’s inability to fully rebound on its lack of affordable housing, there’s no question the city is self-sabotaging itself on that front. In San Francisco, “instead of clear rules, where a developer knows I’m allowed to build here, everything is a negotiation and every project happens on an ad hoc basis,” Jenny Schuetz, housing economist at the Brookings Institution, told The Atlantic in May.
But abandoning return-to-work plans forever probably won’t solve the problem. Meanwhile, two and a half years after COVID sent everyone packing, and amid a slowing US economy that makes job jumping less viable, maybe it’s time for more companies talk to their employees, ask them to meet in person two to three times a week, and see what happens.
It is not their responsibility to “fix” San Francisco. At the same time, there may not be much left to come back if they wait too long.