SAN FRANCISCO - Closed stores. Abandoned offices. Empty buildings. There’s concern over San Francisco’s future and what needs to be done to attract businesses and tourism.
Business leaders say cleaning up the streets, preventing crime and retail theft, and providing tax incentives are a few key components to rebuilding downtown.
"No one’s giving up on San Francisco," said Rufus Jeffris with the Bay Area Council. "We’re not putting our heads in the sand about the problems, but we’re trying to be focused on how to address these big challenges."
City leaders have previously said economic recovery is a top priority.
Real estate investment research shows office vacancy and available space in the city is at 35% and growing.
Park Hotels & Resorts Inc., the investment firm backing two of San Francisco's largest hotels, announced Monday it stopped making payments on a $725 million loan. It's the latest setback for a city's downtown besieged by vacancies.
"This is a big wakeup call for San Francisco to realize that they need tourism," hospitality consultant Bob Rauch said.
The investment firm said the city’s economic recovery remained "clouded and elongated by major challenges" including street conditions, low levels of workers returning to offices, and a weaker-than-expected convention calendar through 2027.
But Rauch said he doesn’t believe the hotels will close, and it could even be a business strategy to improve the Hilton San Francisco Union Square and Parc 55 hotels’ futures.
"I suspect they know what they’re doing, and I suspect one thing they want to do is refinance the hotel with the lender," he said. "Another thing they may want to do is put pressure on the City of San Francisco to clean up its act relative to homelessness and crime."
Rauch said it is possible more hotels could follow suit.
While business travel is back up to 85% from 2019, conventions and even leisure travelers are staying away, real estate investment research shows.
On a major block along Market Street near Union Square, only one shoe shop remains open.
"It’s sad to see, honestly," said Eliot Peck who works downtown. "Huge streets, big sidewalks that are never really filled – it’s not really that crowded anymore."
The Bay Area Council said San Francisco has to pivot and reinvent downtown by repurposing office space, lowering the tax burden on new and existing businesses, and create a place people will visit beyond the work week between 9 a.m. and 5 p.m.
"Create a more 24/7 kind of neighborhood where we have a mix of office and residential and cultural and arts uses," Jeffris said. "Where we can create more energy on a regular basis."
He said another key to success is attracting new industries, including AI and life sciences, to make a new home in the city.