Though there are obstacles, there are positive signs pointing to San Francisco’s downtown recovery. (Courtesy photo)

Though there are obstacles, there are positive signs pointing to San Francisco’s downtown recovery. (Courtesy photo)

Downtown upswing? Merchants express cautious optimism about SF’s ‘ghost town’

Michelle Hong has operated Cafe Madeleine with her husband for about two decades, catering to a mostly downtown clientele of office workers. Like many business owners in one of the hardest hit sections of San Francisco, she’s eager for the downtown area to come back to life. While it’s still unclear when that may happen, this week sparked the first glimmer of hope.

“We are hoping that downtown can revive enough that we can hang on,” Hong told the Examiner in a recent interview. “It’s a little bit hard to tell right now, but I do feel more positive about it than I did three months ago.”

This week, Mayor London Breed announced a new $9.5 million initiative to attract both visitors and workers to the downtown area by holding art events in plazas and other public spaces and increasing the number of community ambassadors. The plan comes as California will lift its COVID-19 restrictions on June 15.

Some 50 community ambassadors starting in late summer would be stationed at downtown transit hubs and tourist destinations in the Union Square, Financial District, Fisherman’s Wharf and Chinatown neighborhoods, where they can answer questions of visitors and engage with those on the street who may be in need of city services.

The effort also includes $1 million to create “SFWednesdays,” a series of at least 10 free cultural events featuring music, dancing and other forms of entertainment. Locations include Union Square, Yerba Buena Lane, Mechanics Plaza and the Transbay Plaza.

Told about the effort, Hong said it “would be helpful,” but she questioned how effective community ambassadors could be in addressing public safety. She added that it will take more than events to save businesses from the brink.

“Downtown, unless they get those office workers back, I don’t really know how they will revive it,” Hong said. “You can have events down there, but that’s not going to save businesses down there. They need a regular stream.”

Since the pandemic took hold of San Francisco, the office space vacancy rate has shot up to as high as 20 percent. Downtown has become what many have described as a ghost town.

Hong was forced to lay off her 45 employees as they shut down their stores last year. But she has since hired back eight people at their South of Market bakery location at 149 New Montgomery St., which reopened in the fall. Still, sales are just 20% of the pre-pandemic days, and their Financial District location at 300 California St. remains closed.

The City’s chief economist, Ted Egan, said that a downtown revival depends upon two key metrics: hotel and office occupancy. Breed’s effort comes at what Egan called a “critical time,” when companies are grappling with reopening and employees are asking themselves whether to stay home.

“If everybody just looks at San Francisco and says there’s nothing to do there, and I am fine here in my pajamas all day so let’s just do that forever, well, then that makes The City’s economic recovery that much more painful,” Egan said. “I think it is the right thing to focus on.”

Daily attendance at offices hovers at around 15 percent, according to Egan, which is up from the start of the year, but lags behind what other major cities are seeing. “It’s not rocketing back,” he says.

Jennifer Stojkovic, executive director of sf.citi, a nonprofit that lobbies on behalf of The City’s business community, said that a rise in the hybrid work model may contribute to the area’s slow recovery.

“Many tech companies plan to slowly phase their workers back in between September 2021 to January 2022 — though this is an evolving situation,” Stojkovic said.

Stojkovic did praise Breed’s effort, calling it “a great step towards making the downtown area more appealing, safe, and hospitable to workers, residents, and tourists.”

Jennifer Friedenbach, executive director of the Coalition on Homelessness, raised some concerns about the plan’s potential impacts on the homeless.

“Activating spaces is great as long as they are done in an inclusive way that embraces individuals of all economic classes, and the same could be said for ambassadors,” Friedenbach said. “Some of the programs do a great job of supporting San Franciscans and visitors, while others act as security forces that displace impoverished community members.”

In spite of the obstacles, positive signals of a downtown revival are increasing. A major signal is big hotels welcoming back guests. Most recently, The Palace Hotel at 2 New Montgomery St. reopened Thursday for the first time since March of last year.

“There’s this pent up demand to travel,” said Kevin Carroll, executive director of the Hotel Council of San Francisco. “We are definitely seeing it in the bookings. We can tell it’s mostly tourism-type travel.”

Those travelers, he said, mostly come in from the Bay Area or elsewhere in the state, and largely for weekend stays. He hopes that summer will bring week-long visits, adding that Breed’s plan should translate into a positive experience for visitors.

“When you come here you want to feel welcomed, you want to feel safe,” Carroll said. While the Wednesday cultural events may not be the main reason people book hotel rooms, “if you are here it’s going to help you enjoy our city, which is really important, especially with social media,” he said.

Hotels are banking on tourist visits, but owners also hope to see business travelers booking rooms soon. While a convention rebound may be far off, San Francisco celebrated Thursday the return of Salesforce’s Dreamforce, its annual software conference, scheduled for September. The company announced that the event would take place both in-person and digitally in San Francisco and other cities.

To lure more convention business to The City and building on her downtown revival efforts, Breed announced on the same day she would include $4.6 million in her two-year city budget proposal to reduce the cost of renting space at Moscone Center, which frequently hosts events such as Dreamforce.

San Francisco saw 1,600 conventions and meetings in 2019, which declined to 29 similar events since April 2020.

“Tourism and convention dollars help pay for important City services and allow us to take care of our most vulnerable residents,” Breed said in a statement. “We’re making it even easier for organizers to host their next event in San Francisco, because bringing these activities will bring life and energy back to our downtown area and help our entire city recover.”

In spite of these recent efforts, experts caution that it may still take a long time for downtown to fully bounce back. “We are still concerned and cautious about how long it’s going to take,” Carroll said. “A full recovery is probably three years away.”

jsabatini@sfexaminer.com

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Mayor London Breed on May 22 announced a series of new investments to support San Francisco’s downtown and economic recovery. (Kevin N. Hume/S.F. Examiner)

Mayor London Breed on May 22 announced a series of new investments to support San Francisco’s downtown and economic recovery. (Kevin N. Hume/S.F. Examiner)

A recent view of Battery Street shows little activity in the Financial District. (Kevin N. Hume/S.F. Examiner)

A recent view of Battery Street shows little activity in the Financial District. (Kevin N. Hume/S.F. Examiner)

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