Through free massages, decompression capsules, and limitless nitro cold brew, San Francisco’s tech companies spent the last decade making their offices considerably comfier than the average cubicle farm. Beyond making the workday pleasant, they attracted workforces whose six-figure salaries altered the city’s demographics, spurring widespread displacement and years of head-scratching over the exact moment San Francisco lost its bohemian soul.
Now, nearly six months after the Covid-19 crisis began, those same startups and tech giants have started to dangle the ultimate perk: the ability to work remotely, indefinitely.
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For a region blanketed by wildfire smoke and gradually phasing out the stricter terms of its coronavirus lockdown, it’s an abrupt shift from the prolonged boom that emerged from the late-1990s tech frenzy.
San Francisco’s official population had already begun to decline slightly last year, shedding some 2,500 people from its all-time high of 884,000. Post-Covid demographic data is at best preliminary, but real estate responds more quickly than census enumerators. In August, Pinterest paid nearly $90m to break a lease on an unbuilt, 500,000-sq ft office it no longer needs, while smaller companies like Credit Karma have closed their San Francisco offices and consolidated employees elsewhere. On the residential side of things, the number of homes on the market in San Francisco is up 150% year-over-year.
Flush with cash only months ago, San Francisco is experiencing multiple crises. Besides its long-running housing and homelessness emergencies, and a transit network in meltdown, the city faces a severe fiscal challenge. Its $13bn budget – larger than that of a dozen US states – now faces a $1.7bn deficit over the next two years. The state is faring no better. In May, California’s projected $5.6 billion surplus for 2020 became a $54.3bn deficit.
Any of these issues could lead newly untethered white-collar workers to re-evaluate living in an ultra-expensive city where the disparities between rich and poor grow ever more apparent. Indeed, they already have. Much of the local business press, such as the San Francisco Business Times, had long been documenting a so-called “California exodus”, which has been felt perceptibly enough in booming Sunbelt states that a “Don’t California My Texas” campaign arose in protest of the new arrivals.
California-on-the-brink-of-collapse has been a perennial rightwing trope no matter how many billionaires call this alleged socialist dystopia home. But the specter of a mass departure has thrown long-festering issues about growth, development, and the unhoused in a new light.
“What does it mean when all these empty apartments are out there?” asks Luke Stewart, a planner who has left San Francisco for Idaho to care for a relative who is ill. “I hope rents in those vacant apartments become affordable when there’s less demand. As of right now, when you have a homelessness crisis it seems like the demand is still there. Housing isn’t necessarily reaching the people that need it.”
That may already be happening – San Francisco’s extraordinary unaffordability may finally have taken a breather. Although rents still average $3,550 per month, that represents a 20% decline from the city’s 2015 peak, a time when anti-tech sentiment awoke and protests against corporate shuttles began to stir.
Tom Radulovich, the executive director of Transportation for a Livable City and a former director of Bay Area Rapid Transit, is adamant that these accelerating trends will alter the demographics of cities, particularly for “the class of people for which work-at-home will be an option”.
Still, it’s unlikely to wind back the clock to the bohemian days of yore, or even the late aughts.
“There’s this narrative of ‘all the boring, wealthy people leave and all the fun artists and queerdos will come back’,” Radulovich says. “It’ll be San Francisco in the 90s. But rents would need to come down a lot for a lot of people who were priced out to return.”
They’ll need cultural amenities to lure them here, but the Covid pandemic has walloped the entertainment, nightlife, and restaurant sectors hard. Every other day brings fresh news of a Michelin-starred chef calling it quits or an 83-year-old family-owned restaurant shutting for ever. The San Francisco Chamber of Commerce reported that restaurant sales are down 91% since March, rendering the idea that a near-future San Francisco could resemble the “poor but sexy” Berlin of 20 years ago a probable fantasy.
“That scenario feels unlikely to me,” Radulovich says, qualifying any prediction with an emphasis on uncertainty. “Work-from-home is an enormous social experiment. We don’t know how it’s going to work out. One possibility is that everyone is realizing this is awesome, and capitalism is woken up to the fact that we didn’t have to go to the office. Another is that capitalism will realize you need everyone in the office or they’re going to goof off.”
The once-hot Mid-Market is the neighborhood that’s felt the brunt of these phenomena, Radulovich says. Long bereft of much street life in spite of its central location, it was marked for revitalization through a controversial tax break in the early 2010s that was intended to lure Twitter and other tech firms. Twitter did in fact take up several floors of a landmarked building, and several mid-rise residential projects continue to alter San Francisco’s skyline, but a cohort of buzzed-about restaurants that hoped to capitalize on residents with disposable incomes soon flamed out.
“The big employers had that Silicon Valley mentality of the ‘corporate campus in an urban setting’, and a lot of the housing in San Francisco feels like gated communities in the sky,” Radulovich says. “Urbanization over the past decade has been counter-urban or anti-urban, where people move from controlled or monitored pods during the course of the day, and they’re not living much of their life in public.”
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Their ever-more-dominant presence may have driven these changes, but nearby tech giants like Salesforce – whose eponymous Tower eclipsed the iconic Transamerica Pyramid as the city’s tallest building in 2018 – recently announced layoffs. In May, Twitter said its 4,600 employees could work remotely indefinitely. A company spokesperson would not comment on the record, saying only that Twitter has no plans to close any of its offices, but this week, Twitter offered more than 100,000 sq ft of its headquarters for sublease.
While conceding that San Francisco’s charm can “work its magic on you if you just stay around long enough”, Radulovich builds a persuasive case that this neighborhood-that-wasn’t is tougher to love than ever.
Comparing their architecture with “Darth Vader’s lair”, he observes that residential buildings with elevators, long corridors, and no private outdoor spaces suddenly feel unsanitary, plus the immediate area’s paucity of street life, ground-floor retail, and green space can feel hostile.
In the wake of Covid, Mid-Market’s “density without urbanity” creates the perfect conditions for a youthful, affluent population to relocate.
According to independent realtor Lance King, that’s precisely what’s happening.
“People are definitely leaving,” he says. “We’re in uncharted territory, but for a lot of workers who are 20- or 30-somethings, a lot of the reasons they’re here aren’t here any more. We’re seeing softening in the condo market, especially for people without outdoor space.”
Hard quarantines have given way to ambiguous lockdowns. But dual-income-earning couples with children who must now negotiate the kids’ distance-learning and their own Zoom calls may yearn for more than 1,000 sq ft. And people who chose San Francisco because they shuddered at a lengthy commute might be eyeing their own suburban aerie, if it comes with a lower mortgage and good schools instead.
King doesn’t think the stratospheric housing market will collapse – “San Francisco has been as bulletproof as it gets since 2009, at that time the worst economic downturn since the Depression,” he says – although the longer this goes on, the more ancillary economic damage will accrue.
“There is still a lot of demand, but if tech workers move out en masse, particularly if they go outside the Bay Area, there’s going to be some void,” he adds. “I think the high-rises are going to be hit very hard, because who wants to go in an elevator now?”
The other variable in this equation is transit. While the leaders of Muni (which runs San Francisco’s buses and streetcars) and Bart (a Bay Area rail system) insist on their safety, ridership remains as low as 12% of pre-pandemic levels. Beyond hygiene worries, reliability is still a question. Many bus lines simply aren’t running at all, and the recent restoration of streetcar service in San Francisco lasted less than one full workday, as even the months of suspension weren’t enough to address years of deferred maintenance. As budget deficits augur more reductions, Radulovich sees San Francisco’s car-centric, postwar neighborhoods, like those on some hilltops or its suburban West Side, potentially suffering from disconnection to the city.
Seth Hamalian, managing principal at Mission Bay Development Group, sees things slightly differently. Transit was already suffering in the era of Uber and Lyft, he says, and in many neighborhoods with sharply reduced service, some people were only using it to commute anyway. When service cuts and revenue drops chase each other in a downward spiral, low-income workers who work off-hours undoubtedly feel the effects the most, and that demographic is all too often left out of these conversations entirely.
Still, for the professional classes, “the longer this goes on, the more damage to transit agencies, and the more it’s going to build the case for remote work – not make the city less desirable.”
Hamalian is adamant that jobs follow people. “If it were the other way around, we’d all be living in Silicon Valley, not spread through the entire area,” he says. A worker’s race and ethnicity factors in terms of relocation, too. “Let’s escape to beautiful, affordable Utah!” might not be quite as appealing to many nonwhite people, given that that arch-conservative state is approximately two percent Asian and one percent Black.
Moreover, some people who did relocate are now eyeing a possible return. Ali Wunderman, a freelance writer living in Whitefish, Montana, was priced out of San Francisco several years ago and now wants to move back. The draw of lower-cost, rural areas has proven so strong that familiar patterns of a housing bubble are becoming apparent even in Big Sky Country. People are buying homes there sight unseen, she says – few of whom have experienced Montana in the winter.
“The perception of it as the last place is alluring to those who have been affected by the virus in a way that we haven’t,” Wunderman says. “These are not people who are from Montana or returning to it, but who idealize Montana as a place free from the restrictions cities bring, including proximity and the diseases that that can spread.”
Many Americans, the fourth-generation San Franciscan adds, have experienced a yearning to be closer with family during the pandemic, and she is no exception.
“The idea that we could reconvene in a city that celebrates creativity is very appealing to me,” she says. “The issue was predominantly [that] the wealth disparity created by tech companies contributed to a major gentrification problem.”
Viewed from a macro level, then, cities that achieved near-cartoonish levels of desirability may simply be lurching uncomfortably into the next phase of an eternal boom-and-bust cycle.
Hamalian, however, remains bullish on their enduring desirability as places to live, work, and play.
“I grapple with the theme … that this could be the death of cities, the fear-mongering you hear thrown out there,” he says. “I try to check myself. Our love affair with cities has waxed and waned many times over throughout history. We fall in love with them and grow to view them as too dangerous, too crowded, too dangerous, the schools aren’t good, whatever it may be that people use as for why cities are going to die and then they flee – and then they make their way back.”