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A slow and unsteady recovery

San Francisco’s challenges grew more pronounced during the COVID-19 pandemic, but they were brewing long before.

Heading into the pandemic, the city was riding high on a decade-long tech boom in Silicon Valley. Its economy was thriving and thanks to high demand for the limited supply of housing (due to restrictive policies that limited new housing development), rent in the city soared to some of the highest rates in the country.

When the COVID-19 pandemic hit, San Francisco’s tech-heavy workforce embraced remote work — and many moved away from the downtown core to see out the pandemic from homes with a little more space and a yard. From 2020 to 2021, the city’s population fell to its lowest level since 2010, erasing a decade’s worth of population growth in a single year.

Since then, San Francisco’s return to the office has been slow. According to real estate company Savills, San Francisco had one of the lowest office availability rates in the U.S. before the pandemic at 9.5%; however, vacancy is now at 36.3%, up from 35.1% reported last quarter.

This major drop in in-office workers, combined with a trend of people seeking more affordable housing elsewhere, has contributed to the diminishment of the city’s once-buzzing downtown core, which major retailers and hotels have blamed for their losses and led to them bidding farewell to the city.

Another factor that caused retailers, in particular, to ditch downtown San Francisco during the height of the pandemic was crime — in particular, a huge surge in shoplifting incidents. While retail crime levels have since receded, many retailers, like Whole Foods, Walgreens and Nordstrom shuttered stores when things got bad.

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Bringing residents back

All of those issues have made the Golden Gate City a less desirable place to live and work. But, the city has big recovery plans — starting with housing availability.

A recent Wall Street Journal article detailed how San Francisco is planning to build more apartments to bring residents back and inject life back into the local economy. So far, 10 office-to-residential conversion plans have been submitted to the city in various neighborhoods, which, if approved, would add more than 1,250 units to the city’s housing inventory.

In addition, local property developer Bayhilll Ventures announced plans in November to build a new 71-story skyscraper in the city’s ailing financial district. If approved, the development will create 672 for lease apartments, with at least 10% being designated as affordable.

Property developers are hoping to tap into positive trends in the San Francisco rental market, where vacancies declined to 7% in November, compared with a pandemic high of 12% in 2020, per CoStar.

Sean Burton, chief executive of Cityview, a Los Angeles-based rental-apartment firm that owns two San Francisco properties, told the WSJ rents have been “clawing their way back” as workers return to the office a few days a week. And it seems property developers are ready to capitalize on that.

While this is good news for the city, there is a catch — the city has reduced its requirements of developers to provide affordable housing, likely to entice them back to the region. Affordable housing advocates grumbled at this, according to the WSJ, but acknowledged the move would jump-start the broader housing market.

If the city’s new focus on multi-family housing units have the desired effect of bringing residents back to San Francisco, that should help to revive the downtown core — bringing workers back to office towers and consumers back to retail spaces — which is good news for both San Franciscans and the local economy.

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About the Author

Bethan Moorcraft

Bethan Moorcraft


Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

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