Downtown Revival: A Wake-Up Call for Urban Centers

by Lucas Garcia
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urban revitalization

Jack Mogannam, the manager of Sam’s Cable Car Lounge in downtown San Francisco, cherishes the memories of lively nights when his bar buzzed with activity well past midnight. The streets were packed with people hopping from bar to bar, strolling along the windows, or simply enjoying the nocturnal ambiance.

Unfortunately, those days have become a distant memory as dwindling foot traffic forced Mogannam to cut back on operating hours. Business has declined by 30%, and a desperate plea for support hangs outside his lounge: “Your Support Matters!”

Standing outside his bar at 10 p.m., Mogannam observes a stark contrast. Instead of the vibrant street party of the past, he now sees a ghost town, with only a handful of individuals traversing the block.

After three years of pandemic-induced exile, downtown San Francisco has yet to reclaim its expected crowds and electric atmosphere. Empty storefronts punctuate the streets, displaying large “going out of business” signs. Prominent retailers like Uniqlo, Nordstrom Rack, and Anthropologie have vanished. Last month, the owner of Westfield San Francisco Centre, a fixture for over two decades, relinquished the mall to its lender, citing declining sales and foot traffic. The same fate befell the owner of two towering hotels, including a Hilton.

Downtown pharmacies have resorted to locking up basic essentials such as shampoo and toothpaste due to theft, and even high-end stores like Gucci have fallen prey to armed robberies in broad daylight.

San Francisco has become a glaring example of what a downtown should not resemble: desolate, plagued by crime, and in various stages of decay. Yet, the reality is that numerous cities across the United States are grappling with a post-pandemic wake-up call: diversify or face demise.

As the pandemic struck in early 2020, people fled city centers and began frequenting shops and restaurants in residential areas and nearby suburbs, opting to stay closer to home. These new habits seem poised to persist.

Downtown areas can no longer solely cater to office workers. They must transform into round-the-clock destinations that foster community gatherings, asserts Richard Florida, a city planning specialist at the University of Toronto.

“They’re no longer central business districts. They’re centers of innovation, entertainment, and recreation,” he emphasizes. “The sooner places realize this, the better.”

Data substantiates that San Francisco’s downtown is experiencing more difficulties than most. A University of Toronto study analyzing 63 North American downtowns ranked San Francisco last in its return to pre-pandemic activity, with only 32% of the 2019 foot traffic recovered.

Hotel revenues remain stagnant at 73% of pre-pandemic levels, weekly office attendance lags below 50%, and commuter rail travel to downtown stands at 33% according to a recent economic report by the city.

San Francisco’s office vacancy rates reached 24.8% in the first quarter, over five times higher than pre-pandemic levels and well above the national top 10 city average of 18.5%, as reported by CBRE, a commercial real estate services company.

The city’s heavy reliance on international tourism and its tech workforce, both of which disappeared during the pandemic, contributed to this predicament. However, other major tech-reliant cities like Portland and Seattle are grappling with similar declines, as indicated by the downtown recovery study that analyzed anonymized mobile phone data from before the pandemic and between March and May of this year.

Chicago, ranking 45th in the study, has witnessed the closure of major retailers such as AT&T, Old Navy, and Banana Republic on the Magnificent Mile due to the lack of a rebound in visitor foot traffic.

Cities like Indianapolis and Cleveland in the Midwest faced downtown challenges even before the pandemic, as they relied heavily on a single industry without booming sectors like tech, explains Karen Chapple, director of the School of Cities at the University of Toronto and author of the study.

San Francisco’s leaders are taking the downtown decline seriously. Recently, supervisors relaxed zoning rules to permit mixed-use spaces, enabling offices and services on upper floors and entertainment and pop-up shops on the ground floor. Additionally, new legislation aims to reduce red tape to facilitate the conversion of existing office space into housing.

Mayor London Breed announced a $6 million investment to enhance walkability and attract businesses to a three-block area near a popular cable car turnaround.

However, Marc Benioff, CEO of Salesforce, the city’s largest employer and anchor tenant in its tallest skyscraper, believes that downtown will never return to its previous state in terms of daily commuting. He advises converting office space into housing and increasing police presence to restore a sense of safety for visitors.

Downtown housing has been crucial for the success of cities like Baltimore and Salt Lake City, suggests Chapple.

Real estate experts also consider office-to-housing conversions as a potential lifeline. Incentives such as significant tax breaks are being offered by cities like New York and Pittsburgh to encourage developers to pursue such conversions.

However, for many cities, including San Francisco, the revitalization of downtown requires more than just housing.

Daud Shuja, owner and designer of Franco Uomo, a luxury clothing store based in San Jose, shares that customers from San Francisco now drive for at least an hour to reach his store. He plans to open a new location in the more convenient suburban area of Palo Alto next year.

“They simply don’t want to deal with homelessness, the deteriorating environment, or the overall ambiance,” he laments.

Nonetheless, San Francisco officials assert that the downtown area, which encompasses City Hall, the Embarcadero Waterfront, the Financial District, and parts of the South of Market neighborhood, is undergoing a transition.

Although Gap closed its flagship Gap and Old Navy stores near Union Square, the company is not completely abandoning the city. It plans to open four new stores from its major brands near the waterfront at its headquarters, anticipating the arrival of other new stores.

Marisa Rodriguez, CEO of the Union Square Alliance, notes that foot traffic is steadily increasing, and a robust tourism season is expected. Sales tax revenue from fine and casual dining, hotels, and motels is also on the rise, defying the notion that San Francisco is trapped in a cycle of doom, according to Ted Egan, the city’s chief economist.

Additionally, Union Square welcomes new upscale fusion restaurants, a hot yoga studio favored by celebrity Jessica Alba, and a rare sneaker shop. The area must overcome the hesitations of both local and national visitors caused by negative press.

“When making travel plans, individuals may think, ‘I’ve always wanted to go to San Francisco, but I keep hearing all these negative things.’ In reality, the city is beautiful and ready to welcome you,” Rodriguez emphasizes. “I hope the noise settles quickly.”

This report was prepared by Anne D’Innocenzio, reporting from New York. AP writer Michael Liedtke contributed to this report.

Frequently Asked Questions (FAQs) about urban revitalization

Q: What is the current state of downtown San Francisco and other urban centers?

A: Downtown San Francisco, along with many other urban centers, is facing challenges in its post-pandemic recovery. The streets are plagued by vacancies, declining businesses, and a decrease in foot traffic. This situation serves as a wake-up call for urban centers across the US, highlighting the need for revitalization and diversification efforts.

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