OPINION:
In 2018, a medical association that had been visiting San Francisco regularly since the 1980s announced it was moving its convention from the city because its members didn’t feel safe on its streets. Others followed, including Oracle, which moved its CloudWorld convention to Las Vegas.
Some cancellations were related in part to the pandemic, but it’s ignoring the obvious to believe that the visible decline of a city once the envy of almost all others had no bearing on the decisions.
As bleak as the present is for “San Fransicko,” the future looks even more grim.
The local station KGO reported last year that “convention clients are weighing their options: safety and cost. And San Francisco isn’t offering an optimistic picture of either these days.”
Coinciding with lost conventions is a decline in tourism. Again, the pandemic played a large role.
While visitors have returned, they have not done so with the vibrancy expected in San Francisco.
Their spending reached only about $12 billion last year. That was 71% more than in 2021, yet that total was still just 86% of 2019’s spending. The city’s recovery, reports SFGate, just “isn’t quite on par with California as a whole.”
Fears that things might not ever be the same again are justified — especially after a real estate investment trust that holds two downtown hotels seems to have given up on “The City.”
Park Hotels & Resorts, based in Virginia and one of the largest hotel real estate investment trusts in the country, is abandoning both the 1,921-room Hilton on Union Square, San Francisco’s largest hotel, and the 1,024-room Parc 55. Prospects are so dismal that the company has stopped making payments on its $725 million loan and plans to eventually remove the properties from its portfolio.
“Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges,” Park Chairman and CEO Thomas J. Baltimore said.
He also cited record-high office vacancies, “concerns over street conditions,” and “a weaker than expected citywide convention calendar through 2027,” all of which “will negatively impact business and leisure demand.”
It’s reasonable to wonder if others will follow. The Wall Street Journal reports that while hotels in Los Angeles have recovered, occupancy and room rates in San Francisco hotels remain below pre-pandemic levels, with revenue per available room “nearly 23% lower in April compared with the same month in 2019.”
Offices are just as empty. Downtown “is experiencing its worst office vacancy crisis on record, with 31% of space available for lease or sublease,” the San Francisco Chronicle says.
To put that in perspective, that means “in the heart of the city,” 18.4 million square feet of real estate is open, “enough space to house 92,000 employees and the equivalent of 13 Salesforce Towers.”
Meanwhile, some retailers have decided that doing business in San Francisco is hopeless. Notable stores that have pulled out or soon will include Nordstrom, Whole Foods, Saks Off 5th, Anthropologie and Office Depot.
Also abandoning downtown are AT&T, which is closing its flagship store, and Cinemark Holdings, the operator of a theater complex. According to the San Francisco Standard, the Union Square shopping district had lost 17 retailers in the past three years before the announcements from AT&T and Cinemark.
Also on the darkening horizon: Westfield, manager of the mall where Nordstrom is one of two anchors and home to Cinemark’s theater, is “surrendering the city’s biggest shopping center to its lender,” the Chronicle says, in much the same way Park is walking away from its hotels.
The Chronicle wonders if an Ikea store planned for “a gritty stretch of Market Street” that is to anchor a mall “that will include dining, retail, co-working and entertainment” will “fix San Francisco’s downtown woes.”
A real estate executive involved in the development predicts it is “going to be absolutely fantastic and amazing.”
But ugly reputations are hard to shake, especially when they’re deserved, and San Francisco’s image as a wreck in motion is no embellishment. Visitors have said they sometimes don’t know if they have stumbled into a rough part of town or if the unpleasant scenery in front of them is everyday San Francisco.
Crime in the city is now as famous as its cable cars, its homelessness troubles are piled higher than the TransAmerica Pyramid, its drug bazaar apparently as immovable as The Rock out in the Bay.
It seems there should be a learning process taking place. But apparently the experiment in progressive self-destruction is far from over.
· Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.
Please read our comment policy before commenting.