San Francisco hogs limelight for wrong reasons

Editor's note: More than three years after the COVID-19 pandemic broke out, major US cities are still grappling with persistent headaches, including high office vacancy and growing homelessness. This page takes a look at some hard questions facing one of these cities, San Francisco, a once-thriving tech hub that has suffered a severe blow.

Once-vibrant metropolis grapples with rampant homelessness, surging crime

Once a vibrant, innovative metropolis, San Francisco has hit national headlines regularly in the past months, for all the wrong reasons.

"A failed city", "doom loop", "post-apocalyptic" and "zombie zones" are used to describe the city's downtown area.

Shuttered storefronts, idling transit and people living in the streets accentuate people's perception that the city is no longer thriving.

San Francisco is struggling with rampant homelessness, a drug crisis, surging crime, several business closures and skyscrapers for sale due to high vacancy rates.

Nearly every large US city is struggling, to some degree, with similar problems under the impact of the pandemic. But while life in the other cities has started getting back to normal, the situation in San Francisco continues to decline.

The city is now grappling with hard questions around homelessness, public safety and exodus of businesses and residents — what many called a "doom loop" — a worsening cycle of residents fleeing, tax revenue plunging and more civic decline.

In the Tenderloin district, the notoriously downtrodden downtown neighborhood, homeless tents line the streets. Human feces and used syringes litter sidewalks.

The homeless problem that has exasperated San Francisco's city leaders for decades despite millions of dollars spent on it has gotten worse.

On the night of Feb 23 last year, the city counted 7,800 homeless people, and 4,400 of them were unsheltered.

Both the increasing homelessness and property crimes feed the perception by many visitors and residents that the downtown is dangerous.

Compared with other major cities in the United States, San Francisco has lower-than-average rates of violent crime, but it suffers from unusually high rates of property crime, such as theft and burglary.

An analysis of the FBI's data by the newspaper San Francisco Chronicle last year showed the property crime rate was 41 percent above the average of 20 major US cities in 2020. The rate of burglary was 67 percent higher than average, and robbery 48 percent higher.

San Francisco Police Department's data confirmed the same trend: Between 2020 and 2022, the city saw a 23 percent increase in property crimes, with spikes in burglary and theft headlining the surge.

A deteriorating quality of life in the city and the remote working model have contributed to the reduced office turnout. San Francisco experienced one of the slowest returns to in-person work in the country.

Last month, the return-to-office rate was about 45 percent of pre-pandemic levels, little changed since February, the security company Kastle in Virginia said. Office vacancies hit a record high of 31.8 percent last month as big tech companies gave up space, the real estate company Coldwell Banker Richard Ellis in California said.

San Francisco lost nearly 210,000 people during a typical workday in 2021 compared with 2019, a Bay Area News Group analysis found. Before the pandemic, the city's population would swell to more than 1.1 million during work hours, but the daytime population dropped 18 percent from July 2019 to July 2021.

The city saw the biggest increase in office space vacancies among major US cities. Nearly 30 percent of San Francisco's office space is vacant, which is seven times more than the rate before the pandemic broke out.

A prominent example would be a 22-story tower on California Street, home to some of the world's most valuable commercial real estates. The building was worth about $300 million in 2019, but the value is expected to decline 80 percent now.

And its residents are moving elsewhere. According to US Census estimates, San Francisco's population dropped by 7.2 percent between 2020 and 2021, and the exodus continued last year.

Greg, who works for a financial institution in the city and asked that his last name not be used, told China Daily that he, his wife and their three young daughters — aged 1, 3 and 5-are leaving the city. He said they had sold their house and just closed in on one in Marin County, about an hour's drive from where they lived.

"We loved what the city once was, but now we can't raise our daughters in what it has become," he said. "I can do my job from home and all of us don't have to be exposed to it."

Dependence blamed

Some blame the city's dependence on the technology industry, which quickly adopted remote working and led to the change in working habits.

The lack of office workers is rippling throughout downtown San Francisco, leading restaurants, retailers and other small businesses to lay off employees or close.

Dozens of stores, including H&M, Abercrombie & Fitch, and Gap, have shuttered over the past three years in downtown San Francisco. Other retailers, such as Whole Foods Market and Walmart, have also announced plans to close stores in the downtown area.

The upscale chain department store Nordstrom closed a store on Market Street earlier this month, and another store inside the Westfield mall will be closed at the end of next month, citing the "dramatic change of the dynamics of the downtown San Francisco".

The same forces that have emptied out the city's office buildings and closed many retail stores have hit hard San Francisco's once-thriving hotel market.

Last year, the owner of the Huntington Hotel sold the property after facing foreclosure, and the Yotel San Francisco hotel sold in a foreclosure auction.

Park Hotels& Resorts has decided to give up ownership of two of the biggest hotels in the city, Hilton San Francisco Union Square and Parc 55 San Francisco.

Hotel owners in New York and Los Angeles are filling nearly as many rooms this year as they did in 2019, hotel data company STR said. Their revenue per available room exceeds what it was before the pandemic.

However, in San Francisco, hotels are still struggling in both occupancy and room rates compared with pre-pandemic levels. Revenue per available room was nearly 23 percent lower in April compared with the corresponding month in 2019.

San Francisco's hotel market is heavily dependent on convention travel. The concerns over street conditions have kept many convention bookers away, and tech companies' remote work has undercut business travel to the city and hotel activity.

In May, hotel revenues were 73 percent of 2019 levels, said San Francisco Travel, the city's tourism bureau. Overnight visits to the city were down 31 percent last year compared with 2019.