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Downtown San Francisco is reeling. Extra distant work may add to the ache

Downtown San Francisco feels like a grave.

Streets that are once overcrowded are deserted and only the sound of car traffic moves the air. Muni buses and BART trains run almost empty. The shop windows are boarded up or empty, from the 172-year-old Tadich Grill to the mussels of trendy juice shops and fitness clubs. Almost all offices have been closed for 11 months with no return date set. The crackling of the last few days made the mood even more gloomy.

The pain could continue beyond the pandemic.

The prospect of workers’ return soon – after elevators on site, after vaccines have been introduced, after schools reopened – has diminished and unnecessary workers remain banned from offices. Remote work, made necessary by the health crisis, is becoming an ongoing policy for many of the city’s largest employers. Once the burgeoning capital of technology, downtown San Francisco may never return to its hectic, busy state.

Salesforce, the city’s largest private employer, is the latest company to confirm that most of its 10,000 local workers will stay home for one or more days in the week following the pandemic. The company said it remains committed to the city.

“San Francisco is and will remain an integral part of our business strategy,” said Salesforce. “And when it’s safe, we look forward to opening our doors again.”

Google, another large office tenant with locations along the Embarcadero, is testing a flexible work schedule where most employees stay home twice a week after the offices reopen. Facebook, which occupies two Transbay towers near Salesforce, said it is not reducing its property holdings in the Bay Area, but rather giving employees more flexibility to work remotely.

Twitter, Dropbox and Levi’s are trying to give up some of their office space as workers stay at home – in many cases indefinitely, not just during the pandemic. Companies rely on remote or flexible work for many reasons, but the boss is competing for employees who care about cutting their commuting and housing costs.

Royal Exchange in downtown San Francisco is closed.

Roland Li / The Chronicle

Randi Weitzman, executive director of technology workforce services at recruiting firm Robert Half, said remote working is here to stay.

Not only have companies recognized that employees can be more productive and not micromanaged, they can also recruit from a larger pool. Providing flexibility is also key to attracting talent, and if it isn’t done, businesses are put at a disadvantage, she said.

“Trust was built. The technology is there to support this, ”she said.

“You don’t have to sit on the Autobahn for three hours or on BART for an hour and a half. You can do more work, ”she said.

It’s not clear how widespread home work will be after the pandemic. Ted Egan, the city’s chief economist, said the city’s current estimate is 25% remote work in all post-pandemic businesses, or the average employee who stays home a little more than a day a week. That estimate seems low when compared to the big tech companies’ flexibility plans, but not every employer is going to be as aggressively long-term remote working as they are willing to accept.

Any downsizing will have seismic effects on the local economy. Citywide sales taxes, a measure of corporate health, declined 43% year over year in the second quarter of 2020. The largest declines were in the city center, with losses of over 70% and restaurants and hotels hardest hit by the declines.

Pedestrian traffic is sparse in downtown San Francisco.

Pedestrian traffic is sparse in downtown San Francisco.

Roland Li / The Chronicle

A slew of downtown retailers are closing stores including H&M, Uniqlo, Gap, and Marshalls, which will continue to weigh on tax revenues and cut jobs. The timeframe for the return of tourism and business travel, the city’s largest economic engine, is unknown. A sprawling symbol of the epicenter of worldliness and the city’s technical convention, the Moscone Center hasn’t hosted an event other than contingency planning meetings and mass vaccinations in nearly a year.

In rare positive news, city officials reported a budget surplus of $ 125 million for the current fiscal year after improvements in property taxes and federal refunds. However, the long-term outlook remains bleak with a deficit of $ 653.2 million in fiscal years 2021-2023.

More than 600,000 people used public transport to get to work every day before the pandemic broke out. The need for more public transport in the face of booming jobs and the population was undeniable.

Now remote working has sparked a financial crisis in BART, Muni and Caltrain and messed up that assumption. The transit agencies have all seen a sharp drop in downtown driver numbers.

There were signs of life in the financial district on Thursday. A party was held at the Perbacco Italian restaurant for al fresco dining. A couple of people stood outside Fog City News to buy Valentine’s Day chocolate, a lifeline for the 20-year-old newspaper kiosk on Market Street.

Revenue is about half the pre-pandemic level, a slight improvement from the spring, said Adam Smith, owner of Fog City. “There has been some recovery. I don’t think it will go back. I think it will go on, ”he said. “I am optimistic.”

He was able to survive with nationwide shipping orders and some business from downtown residents who were more daring to venture after canceling orders for nationwide local accommodations.

“A pandemic is forcing small businesses to get creative and improvise,” he said. However, the staff was halved to two employees.

Shoppers wait in front of the Fog City News in downtown San Francisco.

Shoppers wait in front of the Fog City News in downtown San Francisco.

Roland Li / The Chronicle

Smith believes many workers will want to return when it is safe, attracted by the urban vibrancy that will continue. “There’s also a growing number of people who say, ‘Hey, I don’t want to work from home entirely. I would like to come back to the offices every now and then, ”he said.

Salesforce does not offer its employees free meals in company cafeterias. Hence, fewer employees coming downtown after the towers reopen could hit restaurants and cafes so much harder.

“Salesforce’s office ecosystem is really important to small businesses,” said Lauren Crabbe, owner and CEO of Andytown Coffee Roasters. A café that opened in early 2019 at 181 Fremont, rented by Facebook, overlooks Salesforce Park. The Salesforce Tower is just a short walk away. But the cafe closed in March while Andytown’s two locations on Outer Sunset stayed open.

Crabbe remains optimistic and is committed to reopening this location.

“It obviously worries me a little. Maybe the offices never come back, ”she said. But she added, “People won’t want to work from home forever. For every person thriving from home work, 10 more pull their hair out and yell at their kids. “

Crabbe misses the energy of her Fremont cafe and said her staff do too.

“I miss being near tall buildings. The hustle and bustle of the people walking around you, ”she said. “I hope when everything opens up we can all get back together.”

Community groups hope to attract both tourists and locals to eat, drink and shop to offset a decline in workers following the end of the pandemic.

“Activating public spaces when it is safe and promoting the city center as a destination for visitors, residents and businesses are a priority for the organization,” said John Bozeman, executive director of the Downtown Community Benefit District, which promotes and provides security for the neighborhood – and cleaning services.

Founded in 2019, the group plans events that could include street fairs.

Enrico Moretti, an economics professor at UC Berkeley, said the qualities that made the Bay Area a desirable place to stay will endure: strong higher education, a talented workforce, and ample venture capital. Despite all the havoc in small businesses and low-income jobs, the stock market is near record highs and the largest tech companies are seeing profits rise. All of these factors will help the region recover, even if some workers stay away, he said.

Facebook, Google and Amazon continue to invest billions in planned expansions in the Bay Area.

“I think the underlying economic reasons why this used to be a dynamic economic region are still there,” he said. “This is a good place to come up with new ideas and new products.”

The pre-pandemic challenges in the region remain. High taxes and housing costs are acceptable for some businesses, but these expenses should be offset by well-managed public spaces. In San Francisco, some crimes like break-ins has increased during the pandemic.

“I think these are crucial considerations if you are not trying to compete at the expense,” said Moretti. “We should be much better at doing these things.”

Venga Empanadas co-owner Pablo Romano was scheduled to open a new location in the Salesforce Transit Center in March 2018 but was delayed after two cracked steel girders were discovered and later repaired. Its opening in March 2020 was stopped by the pandemic.

“It’s a blessing in disguise. If we had opened then it would have been a bigger mess, ”he said. Despite the challenges, he hopes to open by the summer.

“The city has recovered from fires, earthquakes and all sorts of things. I don’t think it will turn into a ghost town at some point, ”he said.

The San Francisco Chronicle staff, Tara Duggan and Mallory Moench, contributed to this report.

Roland Li is a contributor to the San Francisco Chronicle. Email: roland.li@sfchronicle.com Twitter: @rolandlisf

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