Spend any amount of time in New York, and you’ll feel it. Manhattan and Brooklyn are teeming with activity. It’s electrifying to be there after years spent relatively locked down.
The question, and one asked this week by the San Francisco Chronicle, is why San Francisco isn’t bouncing back in the same way.
As reporter Roland Li writes: “There’s always been a disparity — New York has 10 times the population of San Francisco — but the coastal tourism and economic hubs have diverged in striking ways as they recover from the pandemic.”
Consider, writes Li, that while the construction of major commercial property projects in Manhattan were completed during the pandemic — and while much of that new office space is almost fully leased — over in San Francisco, projects have stalled and a lot of existing buildings are struggling to find tenants.
One possible way to fill those buildings is to convert them into housing. Wall Street, Li observes, has been doing exactly that for decades. But while in New York, there is clear demand for housing, with rents rising to record prices even now, in San Francisco, it’s not as plain that enough people would — at this very point in time — rent converted office space, even if it were made available.
According to a story today in The Real Deal, new data published by the commercial research company Yardi states that San Francisco is right now the least competitive housing market in all of California, with only seven would-be tenants per vacant apartment, compared with double that number in neighboring Silicon Valley and the East Bay.
It’s not all doom and gloom for San Francisco. Yardi’s research notes that the city’s occupancy rate rose to 93% in the second quarter, compared with 89% a year earlier. Also, apartments rented eight days faster at an average of 41 days.
Still, work-from-home policies are clearly having a major impact on where people live, and many Bay Area employees who could flee the region’s high prices have. (California — led by San Francisco, and followed by Los Angeles — lost more than 352,000 residents between April 2020 and January 2022, according to California Department of Finance statistics.)