SF’s downtown needs to lure people back, but how?

When asked, “who goes downtown for work five days a week?” fewer than 10 people raised their hands Tuesday night in the back room at Manny’s Cafe, packed with about 200 people.

And, right there, the audience demonstrated the problem that city officials are facing in reviving San Francisco’s moribund downtown. On Tuesday, a panel including Rich Hillis, the director of the city’s Planning Department, Sujata Srivastava, an urban researcher of SPUR and Rodney Fong from the city’s Chamber of Commerce discussed solutions to what The New York Times described last month as “perhaps the most deserted major downtown in America.”

Remote work has far outlived the pandemic, and San Francisco’s office buildings are using Kastle security systems at an occupancy rate of 40 percent at the end of 2022. That was slightly less than other major cities, including Chicago, New York and Los Angeles. The office occupancy rate in 2022 for Fridays was below 25 percent, even lower than the rate in 2021, according to Kastle’s weekly occupancy report .

“People like to say we’re the worst. But we’re not this huge outlier,” pointed out Sujata Srivastava, the director of the San Francisco think tank SPUR. She said she didn’t see a future where people are still working “nine to five, five days a week in the office.” New ways of using office space can emerge, including shortened leases and large teamwork tables where workers can gather for certain projects.

She also said that the demand for premium office space remains high for some types of buildings. The Transamerica Pyramid, completed in 1972 but under renovation since last year, for example, is seeing rents rise. 

One concept is to convert other vacant, older buildings with no refurbishment to housing. But such conversion can be costly and complex, as one Budget and Legislative Analyst’s Office report concluded in January. 

“A combination of reforms in the City’s development project planning and approval processes, and financial incentives and subsidies, could help facilitate such conversions for affordable and/or market rate housing,” read the report.

And Rich Hillis, the city’s Planning Director, pointed out that, right now, new investment to conversion hardly makes sense because of high risk and shrinking profit. “In many instances it’s as expensive as building a new building,” said Hillis of doing conversations. “And the rents and the sale prices have dropped more downtown than in other parts of the city.”

Despite heated discussions, there is only one project currently being proposed — a very small floor plan of the Warfield Theatre building at 988 Market St.

Other ideas were also discussed including incentives to encourage such conversions, converting offices to hotels or turning them over to nonprofits. Srivastava said SPUR is studying the feasibility of conversions with the Urban Land Institute and pointed to case studies in Washington, D.C., in which incentives have helped the District build 2,400 units. “It’s not a small amount, considering San Francisco as a whole gets about 3,000 units built a year,” said Srivastava.

Hillis said conversions were more likely to happen first in the smaller, older buildings around Union Square and Jackson Square. “Those would be wonderful places to live and convert some of those old, older Class B, Class C office buildings to housing. So we’ve got to figure out why that’s not happening, or what’s standing in the way of making that happen,” he said.  

Rodney Fong, the President of the San Francisco Chamber of Commerce and a former Planning Commissioner, said that downtown needed to keep its hotel stock because tourists will return. But, he pointed out, that many of the city’s smaller, boutique hotels on Sutter and Post streets were once apartments that were then converted. “So the argument of going back retro to putting people in the downtown that were originally there is not far-fetched,” Fong said. 

“Our challenge ahead is to try to transform downtown into an area that you want to spend time in.” Fong saw an opportunity to reimagine downtown into one of the world’s cleanest and greenest  — San Francisco’s North Star, as he put it. 

Fong reminded the audience of the 1915 Panama Pacific International Exposition that followed the 1906 earthquake. “You can paint whatever picture you want, but I think we need to have the North Star,” he said, suggesting a focus on sustainable science, technology and advances like seawall protection.

“As we talked about what we like about downtown, there’s so much … from museums to Union Square to theaters to the cable cars, to the Ferry Building to the Embarcadero,” said Hillis. “It needs a boost. We have somewhat ignored downtown in the last decade or so.”