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If IT Workers Stay Home, What Happens to 'the Most Empty Downtown in America'? (nytimes.com) 254

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

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  • by Anonymous Coward on Saturday December 17, 2022 @04:38PM (#63138792)

    The market takes over, property prices decline, and people who don't have silicon valley wages, or local small businesses without silicon valley incomes can afford them and thrive.

    The only people getting hurt by this are massive banks with significant property investments, and large businesses who overpaid for expensive property. Both those can take the hit, and the hit gets redistributed to the little guy.

    It's a good thing. Since covid and more remote working my small village has thrived with small businesses, we have a new sandwich shop with better food and drinks than any of the big chain tax evading shit shows like Starbucks who are whinging about the fact people like me aren't buying their overpriced goods in the city centre anymore.

    And I can't say I have the slightest bit of sympathy for them. It's fairly simple - more affordable buildings means more affordable housing and more affordable commercial property for small businesses. That's not a bad thing by any measure.

  • that business. (Score:5, Insightful)

    by bloodhawk ( 813939 ) on Saturday December 17, 2022 @04:40PM (#63138798)
    It is simple reality, pay and rent will fall, lots of businesses will close and like it or not those at home workers will also be increasingly replaced by cheaper workers that are happy to live in cheaper towns or cities and work remotely. kinda ironic that the demand for working from home will actually see a lot of the same people lose their job or have to work for significantly less money.
    • Re:that business. (Score:5, Insightful)

      by jhoegl ( 638955 ) on Saturday December 17, 2022 @05:11PM (#63138850)
      Article whines and cries about money, because rich own news outlets.... news at 11.
    • If the job is remote-only, then even with a lower salary, the worker could probably go live in a cheaper area and have a bigger house or apartment compared to living in a big city.

      Let's say I earn 3000EUR/month, pay 800EUR for rent (not including electricity etc) and pay 200EUR for fuel to go to/from the office. I am left with 2000EUR/month.
      Now let's say I work completely remote, so I can rent a bigger apartment in a small town for 500EUR/month and I do not need to drive to/from the office, but let's say I

      • by pruss ( 246395 )

        All sounds right, except that lunch need not be any more expensive for in-person work if you just pack a sandwich.

        • And for the same price as that sandwich I can make something fresh, so it hasn't been sitting for 5 hours when eaten, and go and eat it in my garden. Better food, better mental health.

      • yep I agree, however you will find a huge cohort that think they get to live in the same expensive areas with the same paypacket, except they don't have to go into the office. Those people are in for a rude shock.
  • Detroit. Or, closer to home, Oakland and Fresno -- but closer to Detroit.

    • I think the closest thing would be Los Angeles. Well maintained skyscrapers with some office workers in them, and absolutely nobody walking around outside.

      • I think the closest thing would be Los Angeles. Well maintained skyscrapers with some office workers in them, and absolutely nobody walking around outside.

        Wasn't that business's dream?

        1. Get rid of all the workers doing the actual work.
        2. Something something something
        3 PROFIT!

        Turns out that workers, far from being a cost center, are central to the whole damn economy And if those workers don't want to return to offices, they simply won't. Or in many cases, already haven't.

        The pandemic didn't cause this - it just moved up the timing a few years, as we now have good enough systems that, in many cases, it's just the incompetents who don't want to aband

      • Nobody walks in LA anyway.
    • No it's not going to turn into detroit. Detroit's problem was deindustrialization. That's not what's happening here. The jobs aren't going away they're just being done from home. If anything it'll mean more lively cities as those dull office buildings get turned into living quarters.

      And if you're thinking about the projects the problem with the projects was a whole bunch of rural people often black or brought into the cities with the intention of getting them jobs through government programs and then Re
      • Those buildings won't get turned into living quarters. Too expensive to convert, and no reason for people to live "near the downtown office" then the downtown office is a barren wasteland.

        • by Somervillain ( 4719341 ) on Saturday December 17, 2022 @06:06PM (#63138974)

          Those buildings won't get turned into living quarters. Too expensive to convert, and no reason for people to live "near the downtown office" then the downtown office is a barren wasteland.

          ...but many like living in an urban area, especially when they're younger. Your only motivation may be to shorten your commute, but some feel otherwise. Some like the city, some like the burbs, some like rural living. I live in the city by choice, even back when I worked in the suburbs. I like my neighborhood. I like biking everywhere. I like the school system and amenities for my kids. I WFH full-time ATM. I am not eager to get in the burbs.

          Where I live, the burbs are nearly the same price per square foot...just you get much bigger yards...because everyone in the area also had the idea of moving 2-5 towns over and commuting into the city.

          This is a market scenario. Prices will go down and it is pretty cheap to convert into living quarters...especially compared to the price of keeping a large building unoccupied.

          Real estate developers will bitch and whine...like they always have and always will do...you'll never find a more corrupt, lazy, and entitled lot than those who make a living in real estate. However, their justification for decades for overcharging society and exacerbating the homeless crisis is that it was a market economy and they're pricing in line with demand...now that it works out of their favor, we'll hear whining, but they'll certainly get no sympathy from me.

          • Not really, because the internals have to redone for individual power, water, sewage, cable and likely HVAC.

            It's also a major change of use, so planning and zoning rules coming into play too... which require occupier parking availability usually as well.

        • We've got a big homeless issue here and some of those building could get turned into SRO rentals, think where Elwood lived in the Blues Brothers. Single room, single occupant, shared bathrooms and common area.
      • by Budenny ( 888916 )

        I don't know. Could we see a business exodus? Probably. Could we see large tracts of abandoned housing? It seems unlikely. Large numbers of abandoned office blocks? That seems possible, given that both companies and individuals are moving out of California.

        For the Detroit scenario to happen there probably needs to be some dramatic safety and quality of life event, like the Detroit riots. Also some economic tidal wave, like the de-industrialization that you refer to. We don't seem to be seeing that a

  • The best option is to copy the real estate model in Singapore [ssrn.com]. The increased residential space need not only be offered to the currently homeless, instead it can be managed in programs where families rent for very long 100 year or more periods - enabling the treatment of rental property as their own and passed down in ways that preserve wealth in families.

    The government should buy these buildings, and either retrofit them as residence blocks or rezone as mixed residence/light commercial. Some offices I'

    • by david.emery ( 127135 ) on Saturday December 17, 2022 @04:56PM (#63138824)

      Mebbe that would work if the city also copies Singapore's low tolerance to crime and social misbehavior.

      • Re: (Score:2, Insightful)

        by rsilvergun ( 571051 )
        Crime has been dropping nonstop for decades. On paper there's an increase because we locked down for 2 years. But the overall trend is way down.

        I suppose we could lower it a little bit more if we were brutal enough to kill people for petty drug offenses. Honestly I'd rather have a little bit of petty crime than have my government killing people for petty crimes. Wage theft far exceeds the losses from petty theft anyway. Still you're bound to reduce crime rates if you just kill anyone who might be a crim
    • "The government should buy these buildings" hahahah lol hahaha Right! cash out the rich owners and rich corporations with tax dollars.
    • by cciRRus ( 889392 )
      To clarify - the "99-year sale" of public housing in Singapore is always built from scratch; the government does not buy existing residential buildings then convert them to public housing. It could be possible for the government to buy over buildings then tear them down, then build public housing on that piece of land, but never take over the existing building.
  • by Angelwrath ( 125723 ) on Saturday December 17, 2022 @04:52PM (#63138816)

    It's bad enough we have a new drug epidemic on our hands with Fentanyl sending overdose deaths skyrocketing, but now add WFH / WFAnywhere prevailing, and you get urban decay.

    - City "bad part of town" expands because there's less people
    - Fewer people downtown so more awnings; homelessness becomes much more visible
    - Rather than a concentrated area where people take drugs and go through the process, they experience these effects everywhere. Result is more disturbing imagery, more random assaults, much more broken windows. And I see SF has a problem with brazen daylight attacks, which is its own problem.

    Result: Employees don't want to work there, companies cancel leases, buildings go under-utilized. Developers start buying commercial and appealing to city hall to convert to residential. Or some property owners go bankrupt and the buildings go dormant.

    See NYC in the 70s and 80s.

    • Exactly right (Score:5, Insightful)

      by SuperKendall ( 25149 ) on Saturday December 17, 2022 @05:15PM (#63138858)

      It's a shame,. as I love some aspects of SF - I've been to a lot of conferences there in the past, and was back briefly for a morning this year. Some parts still do not look too bad...

      But even in the nicest areas things do not feel really safe, there are still homeless almost everywhere, and SF has some of the most mentally affected homeless people I have seen from walking around many downtown areas.

      If left unabated, who would want to work there? I was there visiting a company - that was planning to move out of downtown SF. Who would want to live there? Home prices in-city would have to drop to about 10% of current values before I'd even consider it, and even then probably not.

      I just saw video yesterday of the most recent Glitter Bomb thief trap. Part of the video was glitter bombs for car thieves... these guys have set routes they patrol every day, multiple times a day. They casually break widows just to check and see if a car might have anything (they break rear windows often just to fold rear seats forward to look in trunk). But the most disturbing thing I saw was guys jump out of car, in traffic, the break the rear window of a hatchback that was stuck in traffic to take whatever they had, with the driver and passengers still inside! How can anyone live in a city where that is accepted and normal?

      • Re:Exactly right (Score:4, Interesting)

        by Ed Tice ( 3732157 ) on Saturday December 17, 2022 @08:58PM (#63139296)
        SF, I'm not sure who would want to live there for non-economic reasons which might be why SF is the downtown struggling the most. If I could buy an apartment in midtown Manhattan say 2000 square feet floor of a building for US $400k, I would suddenly have a strong desire to live at least part of the year in Manhattan. If I could get the same in SF, I'm not so sure. SF never really built the arts and culture needed to be a city with it's own character. Just a place to commute to a glass tower and then go home.
    • As a very famous resident of San Francisco used to sing, "America eats its young." Ya'll on ya own.
    • by PPH ( 736903 )

      City "bad part of town" expands because there's less people

      For a while. But eventually the junkies move out (or at least try) to follow the wealth into the suburbs.

      Developers start buying commercial and appealing to city hall to convert to residential.

      Residential for whom? The workers moved out. The junkies followed the workers (their loot, actually). Developers don't want to rent to the latter types anyway (like they are actually going to pay rent). The city takes over the housing problem and eventually you get Cabrini Green.

  • The city where I work is trying to convince the government to get its workers back into the office because businesses are dying. All those government workers who would go out to lunch or use other services are no longer.

    Reminds me of when the U.S. government was going through its base realignment process. One of the bases under consideration from closing isn't far from me. The howl and cries from businesses saying they'd lose money or have to close if the base was closed was deafening.

    Remember this the nex

  • It'll be "Escape from San Francisco" (https://en.wikipedia.org/wiki/Escape_from_New_York) And no doubt, the administration for the penal colony will be on Alcatraz Island...

    • by Entrope ( 68843 )

      There was, in fact, a California-based sequel [wikipedia.org] to Escape From New York, but it was set farther south than San Francisco.

  • 30 years ago there were many scary parts of San Francisco. Gentrification has made most of the city less scary, but at the same time pushed out its artsy, wierd, and creative side. I don't think prices can drop enough to bring that back gracefully. Residential there seems to have gotten close-- maybe needs to go about 10% lower and interest rates need to drop. Office space asking rent seems to be about 20% higher than what the market will really bear though, and about 30% higher than what would be neces

  • This is very similar (Score:5, Interesting)

    by RitchCraft ( 6454710 ) on Saturday December 17, 2022 @05:08PM (#63138842)
    This is very similar to what has been happening to down towns in small town America over the last 25 years. Big box stores and the Internet have decimated small town America. The solution? None that I can see as I travel from small town to small town in my area (Ohio) and see ghost town down town settings everywhere. The lesson here is perhaps that down town settings are finished for good. Tear them down and find better uses for the land. My home town alone has leveled many 100+ year old buildings down town because no one was interested in them. The only thing left is a few banks (of course) and a theater that somehow defies going out of business even though it's literally falling apart.
    • Re: (Score:2, Interesting)

      by b0s0z0ku ( 752509 )
      There is a solution ... a massive geomagnetic storm or simply North Korea EMPing most of the developed world. Set tech back 50+ years in a day. Most people just wouldn't like the solution :)
    • by Tony Isaac ( 1301187 ) on Saturday December 17, 2022 @11:06PM (#63139492) Homepage

      Small towns in America have been declining a lot longer than the last 25 years. As farming became industrialized, the need for manpower on farms decreased sharply over the last century, forcing the children of farmers to look for work in cities. Big box stores continued the trend, but they didn't cause it.

  • by thegarbz ( 1787294 ) on Saturday December 17, 2022 @05:17PM (#63138860)

    You can be forward thinking and adopt sensible multi-purpose zoning and turn your city centres into bustling mixed residential areas, or you can pretend businesses will magically come back and turn into Detroit.

    • Houston has no city zoning law. Its downtown buildings have been converting to residential space for decades already. Yet its downtown is still struggling to attract enough people to make it a thriving place to live. For one thing, there are no supermarkets downtown, making it more difficult to buy food. My wife and I have considered moving downtown, but it's just not ready yet.

      • Then if you move there, now you're in Houston and nobody wants that.
  • That's pretty much the standard response to any situation. The government can always spend its way out of a jam.
  • And people can afford to have a place to live again. Also a handful of billionaires will be slightly less god-like and reign over Us with a slightly softer iron fist.
  • Unlike the death of small town America where the losers were relatively small people, the loss of value in commercial property portfolios is going to hurt people with a lot of influence. This won't stop it from happening in the long term, but it will result in propaganda form some sources that 'working from home is a skiv' etc. The UK's Daily Telegraph is banging this drum monotonously.

    The long term solution in my city of Manchester, England, has been the arrival of vast amounts of high density, multi store

    • by PPH ( 736903 )

      vast amounts of high density, multi storey housing

      Noooo! What about the painted ladies [staticflickr.com]?

    • Not gonna happen. That genie left the bottle.

      And stuffing it back in will not be easy. The current workforce ain't like the old one was who only cared about money and amassing as much of it as possible. You are dealing with a workforce that only wants enough money to get by, knowing that they won't ever save up enough to buy anything of relevance anyway, so why bother trying? And since Basel III pretty much means you'll only get a mortgage loan if you don't really need one, they also have no chance of getti

  • by lpq ( 583377 ) on Saturday December 17, 2022 @05:34PM (#63138898) Homepage Journal

    They always talk about how there is a lack of housing in SF and other tech areas, maybe they need to convert some of that office space to residential dwellings -- that would solve the lack of housing problem and need for long commutes -- imagine, living and working in the same area -- then they could do joint work w/o the commute. Of course, i suspect housing is no where near as profitable as commercial space, but if commercial space is over-built, maybe balance is needed? Not as much fossil fuel use by eliminating commuting.

  • by AmazingRuss ( 555076 ) on Saturday December 17, 2022 @05:39PM (#63138912)
    ... will gradually spread up Market, until it meets the one in the Tenderloin. It's gonna get crazier than the 70s. Same with New York.
  • Downtown SF sucks (Score:5, Insightful)

    by nicolaiplum ( 169077 ) on Saturday December 17, 2022 @06:36PM (#63139034)

    Downtown San Francisco sucks in a lot of ways. The aggressive homeless people make it unpleasant to be in some parts of it (and yes, it sucks to be homeless too, but there's no effective work to help them in ways that mean they don't aggressively hassle other people). The soulless corporate buildings and facilities are not very interesting. The active, aggressive hostility towards anyone "tech worker" gets to you after a while (SF is the only city in the USA where I've been assaulted just for being who I am, and it's happened twice).

    When you add an hour or more journey to get there from wherever you live, it results in having to spend a lot of time to go to a place that's just not so great to be.

    Without an office job to force you to go there, why go?

  • Lower Manhattan. (Score:2, Redundant)

    by speedlaw ( 878924 )
    I worked in lower Manhattan in the pre internet era. Center of the world, all commerce, street retail was food, bars, stores, even titty bars... Went back recently. Most of it is gone. Storefronts closed up and clearly not cleaned for years. I was the only guy in a suit (?!). Money used to flow down those streets, because you needed to be near other people to "do business". Downtown as a concept is going the way of the Age of Steam. It has a certain romance and was a way of life...but its time has pa
    • A friend of mine lived a few blocks from the WTC towers. When they went down he said it killed the whole area as all the markets and shops the people needed to live around there were destroyed.
  • by argStyopa ( 232550 ) on Saturday December 17, 2022 @07:17PM (#63139126) Journal

    Developers that paid high in the assumption that they would be able to charge sky-high rents forever CANNOT be 'saved' when they start to cry that they're going bankrupt "and it's not their fault".

    2 points:
    - it absolutely IS their fault. Market prices don't rise on their own, they rise when owners feel they can charge more, and renters pay more, starting a cycle that ends at rents that are unsupportable when demand falls. This is fine, but only painful failure by the owners will drive market rents back down to the start again.
    - this is an ENTIRELY NATURAL part of the commercial cycle. Capitalists assume risk as a part of investing in capital. We *cannot* have a system where that risk is mitigated by government compulsion of the masses (ie through bailouts and subsequent taxation). Capitalism REQUIRES (economic) death of the noncompetitive as much as evolution requires failure of less-adapted species. The current system is broken where billionaires get the rewards at the top of the economy, and get bailed out from their risk at the bottom.

    Do not repeat the dot.com crisis and then the housing/lending crisis again.

  • Its not deserted. It is actually very pleasant. And lots of restaurants and nightlife. The district they are referring to is a 5x5 block between north beach, Embarcadero, Union square and soma. Totally blowing it out of proportion.
  • The world is now post-pandemic.

    This has changed how we shop, how we eat outside food, how we socialize, and how we work.

    Some things may be dead forever, like 24-hr stores/restaurants, eating fast food in open lobbies.

    But one thing that the pandemic shutdown demonstrated was that the corporate business that survived the shutdown can operate fine fully remote. There's literally no need to return to the office fulltime, ever.

    All the "vanity" stores, companies, and organizations with unsustainable busi
    • by rlwinm ( 6158720 )

      The world is now post-pandemic. This has changed how we shop, how we eat outside food, how we socialize, and how we work. Some things may be dead forever, like 24-hr stores/restaurants, eating fast food in open lobbies.

      Maybe where you live things have changed. During the whole pandemic nonsense nothing changed where I live. Life is exactly the same as it was before that crap. Occasionally you see some typically out-of-towner wearing a mask who gets funny looks. But it seems this is definitely an echo cham

    • by ahodgson ( 74077 )

      Life here is pretty much 100% back to normal. Some businesses didn't make it, and there's more WFH. But otherwise, other than the maybe 1 in 20 people still hanging onto their masks, totally back to 2019.

  • Biased for IT people (Score:5, Interesting)

    by rlwinm ( 6158720 ) on Saturday December 17, 2022 @08:18PM (#63139220)
    This article seems completely biased towards IT/software people. There are many high tech jobs that can't be done from home. For example, at one point in my life I was designing big FPGA filled boards to control a particle accelerator (itself used for things like chemical manufacture). How exactly am I supposed to work on a particle accelerator at my home?

    I've also done a bit of RF work. While I have a lab at home it is far from a full RF lab. This idea that certain propeller heads have about work from home is mostly pushed by people who don't have a single callus on their hands. Could you imagine something like the space shuttle being built by engineers mostly working from home? No. Real high-tech (not writing web wrappers for database CRUD operations) isn't easy to do without labs and industrial equipment. That means that for actual high-tech advancement WFH is not an option.
  • by backslashdot ( 95548 ) on Saturday December 17, 2022 @08:41PM (#63139256)

    "Escape from San Francisco." Production costs can be minimal because it'll be a documentary.

  • by jdawgnoonan ( 718294 ) on Saturday December 17, 2022 @09:07PM (#63139308)
    It is about time that these good jobs became something that could be done anywhere. Yes, places like San Francisco may loose out, however the rest of the US will gain and that is a good thing. Since no physical things actually get made in Silicon Valley, there is not factory space that ties thing there. It is about time that this wealth is shared.
  • But now there's a more existential question of what the point of a city's downtown even is.

    For around a year I went every week from Santa Cruz to Club Trocadero at 4th and Bryant. Then the neighborhood got gentrified and they shut down the club, even though it was there before the fuckos who moved in and ruined SF. So the real question is what the point of a city even is. It's clearly not to have culture.

  • by istartedi ( 132515 ) on Saturday December 17, 2022 @09:26PM (#63139334) Journal

    It really wasn't that long from 1950s Detroit to them making jokes about it. The Motor City was the metaphorical engine of post-war America. There's nothing that says SF can't end up that way. It could be like Fry's Electronics, writ large. You know Fry's? The mecca for geeks to come and buy... the hardware that would be used to build the online world that would eventually... make Fry's obsolete.

    Arguably it's just a continuation of that. "Remember when all the geeks congregated in SF?", but they built the technology that makes it practical to... work someplace else and collaborate just as effectively, and much like Detroit kind of hung in mid-air like a cartoon character off a cliff, SF might be doing this now and it will only be apparent in hindsight if true. I've actually been thinking along these lines for a good 10 years, perhaps even written other posts like this.

    It doesn't have to be like Detroit. It can be a safe yet affordable city again. It has a lot of things going for it that Detroit doesn't--better weather for one; but this whole deal of paying the equivalent of a car a month just to afford a house has to end at some point. It was always silly to think it was sustainable. It has just never been prudent to bet against it because it always finds a way to pick itself up and dust itself off--until it doesn't.

  • by smithmc ( 451373 ) on Saturday December 17, 2022 @10:57PM (#63139462) Journal
    ...real estate prices start dropping to something even remotely like manageable levels? OH NOES!
    • Why would they? These buildings are currently designed and zoned in a way that only attracts a certain type of renter. You can't address the housing crisis by hoping the free market magically sorts out a problem that braindead government zoning restrictions created.

  • Work sucks which is why we are paid to work not paying to work.
    Commuting is uncompensated work turning natural resources into air pollution. The goal should be dispersed WFH so workers can get their lives back while saving gobs of money normally wasted on commuting.

    If rent seekers want tenants it's on them to entice customers.

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