Home prices and rents in San Francisco were once prohibitive, but the city’s office vacancy rate has risen from 5% in 2019 to 24% in the wake of the COVID-19 pandemic and the telecommuting epidemic, about seven places lower than the average for major U.S. cities percentage point. The current occupancy rate of office buildings is only 40% of that before the epidemic. This will have a major impact on the city’s tax revenue. In a matter of months, Yelp vacated its headquarters, allowing its roughly 4,400 employees to work from anywhere in the United States. What will happen to once bustling city centers as more and more people work from home? San Francisco will test the answer to that question. The city’s chief economist, Ted Egan, has sounded the alarm about tax cuts. In a typical recession, the turnaround is a fairly simple equation of rents falling enough to attract new tenants and the economy improving enough to spur new demand. But a more important question of the moment: What is the point of downtown.
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