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Downtown San Francisco Can’t Shake Working From Home

The Covid-19 pandemic decimated activity in large North American central business districts, none more so than downtown San Francisco, which has struggled mightily to rebound.

These statistics, from a recent report by the University of California at Berkeley’s Institute of Governmental Studies that uses mobile-phone location data, are from last spring (a report with updated numbers should be out next month). Timelier Google location data for the whole city indicate that while retail and recreation mobility has continued to rise, activity at workplaces — which are concentrated downtown — has been about the same in September and October as in the spring.

The much-watched back-to-work statistics from Kastle Systems, which measure how many people come into the buildings that use the company’s security systems, do show an increase for the San Francisco metropolitan area, to 42% of pre-pandemic normal last week from about 35% in the spring — bumping it up to second-to-last place among the 10 metro areas tracked, ahead of Philadelphia. But it’s not clear how much of that is in downtown San Francisco and how much is in other areas like the large complex of biotech labs and offices along the bay just south of the city, where the parking lots were full when I passed by on a workday late last month.

My view was from an upstairs window of a double-decker Caltrain that I was riding to get a sense of the (greatly underutilized) current state of public transportation in the San Francisco Bay Area, the topic of another column. Subsequently, I spent a couple of days roaming around downtown San Francisco. Having visited a year earlier when it was an eerily deserted wasteland where you could ride the cable cars for free, I can report that it felt somewhat less deserted, the cable cars are back to costing $8 a ride, and a fair number of tourists are riding them. There was also a lot more going on in downtown San Francisco than in nearby downtown San Jose, which according to the UC Berkeley report was at 50% of pre-pandemic activity this spring. But downtown San Jose is perennially sleepy. Compared with its former self, and even with some outlying city neighborhoods and suburban downtowns I visited, San Francisco’s downtown is still awfully quiet.

Why is that? Since the onset of the pandemic, San Francisco has been the subject of pretty much constant analysis and critique, with observers calling out its struggles with wildly expensive housing, persistent homelessness, drug abuse, rampant petty crime and dysfunctional governance. These are real problems, but none is new. If you want to know what’s changed about the city since February 2020, the main answer is simply that large employers there and in surrounding areas, as well as those they employ, took to working from home with greater alacrity at the outset of the pandemic and have stuck to it with more persistence than their counterparts anywhere else in the US.

According to the US Census Bureau, about 35% of employees in the San Francisco and San Jose metropolitan areas were still working mostly from home last year — higher than in any other large US metro area and up from 7.2% and 4.8%, respectively, in 2019. Two close-to-downtown neighborhoods in San Francisco had WFH shares above 55%. With some large area employers finally requiring workers to return to the office this fall, those numbers will be down somewhat this year, but the change from before the pandemic will surely still be huge.

By contrast, the statistics on homelessness and crime in San Francisco show no such sea change. The city’s homeless population was actually slightly smaller in January 2022 than in January 2019, albeit higher than it was for most of the 2010s.

With crime, the story depends somewhat on which one you’re talking about. Homicide is the one for which statistics are most reliable over time and across jurisdictions, and San Francisco’s homicide rate did go up a shocking 50% from 2019 to 2021 (it’s down 9% so far this year). But the 2019 homicide rate was the city’s lowest in more than 34 years, and compared with every other year in the 2010s, the 2021 figure didn’t look so alarming. For perspective, I’ve included the national homicide rate in the chart below, plus those of Portland, Oregon, and Minneapolis, two cities with (1) empty-ish downtowns and (2) much clearer evidence of a pandemic murder wave.

While San Francisco has never been one of the nation’s murder capitals, it has long been plagued by rates of robbery, burglary and theft much higher than those of California and the US. And while robbery and burglary had at least been trending downward over the years, there was a sharp increase during the 2010s in larceny-theft, which covers offenses such as shoplifting and pickpocketing. This started before California voters decided in 2014 to reclassify all thefts of $950 or less as misdemeanors and worsened afterward.

Since 2019, though, larceny-theft in San Francisco is down 17%. Most other offenses are also now at levels below or similar to those before the pandemic, with the one big exception being auto theft, which is way up in the rest of the country, too.

Some of this can probably be chalked up to there being fewer people out and about to rob or assault or pickpocket, and fewer open stores from which to shoplift. The risk of being a crime victim may well have risen for the much smaller number of people going to downtown San Francisco. Similarly, homeless people can both seem more threatening and be in greater danger themselves when fewer other people are on the street. San Francisco’s ills have also been spreading beyond its borders. With fewer people going out in the big city, Walnut Creek, home to one of the region’s liveliest suburban downturns, has experienced a sharp increase in robberies over the past two years. Homelessness rose in the rest of California from 2019 to 2022 even as it fell in San Francisco.

Meanwhile, the rise of remote work makes it easier for those exasperated by the high costs and persistent problems of San Francisco and the Bay Area to flee, with San Francisco’s population falling by an estimated 58,764, or 6.7%, from April 2020 to July 2021 and that of the rest of the nine-county Bay Area by 124,294, or 1.8%. San Francisco is the second-most-affluent large US city, and San Jose is the most affluent, with estimated median household income in 2021 of $121,826 and $126,377, respectively. The San Jose and San Francisco metropolitan areas also top the median income list, and San Francisco is one of the relatively few principal cities of a large metro area that is more affluent than its suburbs (San Diego and Seattle are among the others). Its residents tend to be people with ample resources to escape what they deem a bad situation, especially if they can keep their jobs when they leave.

In some ways that bad situation is already improving. San Francisco rents have gone from about 230% of the national average in 2019 to 166% as of September, according to Apartment List’s estimates. The city’s politics also appear to be in the midst of a course change, with voters already tossing out several school board members and the district attorney. But then there’s that semi-deserted downtown, and the havoc it threatens to unleash in the form of a commercial real estate crash and possibly a public transportation meltdown, too.

The fact that so many people in San Francisco and rest of the Bay Area could and can work from home has been a blessing in many ways. The city and area had about 70% fewer Covid-19 deaths relative to population than the US as a whole, giving the area a Covid mortality rate similar to Canada’s and lower than that of all but a couple of European countries. The expanded ability to work from home also brought more flexibility for parents and others with care responsibilities, new opportunities for the disabled and less geographically constrained labor markets, among other benefits. WFH is fine, but dealing with the fallout from the Bay Area’s extreme preference for it isn’t going to be easy.

More From Bloomberg Opinion:

• San Francisco’s Empty Train Cars Spell Trouble: Justin Fox

• California Versus Florida, a Covid Reckoning: Justin Fox

• Make Sun Belt Cities More Like New York and L.A.: Conor Sen

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. A former editorial director of Harvard Business Review, he has written for Time, Fortune and American Banker. He is author of “The Myth of the Rational Market.”

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