SAN JOSE, CALIFORNIA - AUGUST 17: Jenny Dang, owner of China Wok in San Jose, Calif., says business continues to suffer at her longtime restaurant in downtown San Jose, Calif., Wednesday, Aug. 17, 2022. (Karl Mondon/Bay Area News Group)
Jenny Dang stood inside the entrance to her restaurant, China Wok, in downtown San Jose on a recent weekday and waved toward her customer-free dining room.
“Look, lunch – so empty here,” said Dang, a 38-year veteran of the downtown scene. “I don’t know how long I can stay.” Business is down 60% from before the COVID pandemic, she said. “It used to be good.”
While other major U.S. urban cores are teeming with people, downtown San Jose is seeing only half the human activity of pre-pandemic times, central Oakland is slightly worse off, and San Francisco’s core is not even a third of the way back to its former level – the worst recovery level of any large city in North America, according to new data. The University of Toronto numbers, based on cell phone location information, quantify what’s evident to anyone setting foot in Bay Area city centers.
“You don’t need to be a statistical giant to know a ghost town when you see one,” said Jim Wunderman, CEO of the Bay Area Council, a group representing hundreds of employers.
The downtowns of the Bay Area’s three most-populous cities lag far behind other major U.S. urban centers in activity, with San Diego’s nearing 90% of pre-pandemic levels, Tampa’s at 85% and New York City’s at 78%, the data indicate. Local business leaders said the shift to remote work has hit the Bay Area especially hard because so many jobs in the region can be done from home.
Businesses wanting to get employees back into offices five days a week risk becoming unattractive employers, Wunderman said.
“They’re choosing to make a go of it in a more remote way, and that leaves our downtowns empty, and that has economic implications that are quite profound,” he said.
On Post Street in downtown San Jose, Angel’s Cleaners owner Angel Tran has managed to keep her 18-year-old business afloat, unlike many in her industry. But her income is down about 50%, she said. Competitors’ closures have delivered her a few new customers, but many patrons who used to bring clothes in weekly now come in only every three or four weeks because they need less office-ready attire, Tran said.
San Jose’s urban center, said Derrick Seaver, CEO of the city’s chamber of commerce, lacks the residential density of many U.S. downtowns, making it more dependent on office workers, business travelers, and visitors for conventions and other large events, all of whom are scarcer today. In the fiscal year before the pandemic, the San Jose McEnery Convention Center had 118 events, with 882,000 attendees, but in the fiscal year ending this June, it had a third of the events and guests, city data show.
City sales tax revenues from downtown are around 35% of pre-pandemic proceeds, San Jose’s deputy director for business development Blage Zelalich said.
Up the bay, downtown Oakland is seeing just 46% of its pre-pandemic activity. Markus Supply Ace Hardware saw record customers during the initial spring 2020 lockdown because it was an essential business allowed to stay open and many people had time to tackle home improvement projects. Now, business is down 5-10% from pre-pandemic levels, said owner Dan Altwarg.
Steve Snider, executive director of the nonprofit booster group Lake Merritt-Uptown and Downtown Oakland Community Benefit Districts, cited an apparent “uptick” in downtown activity, but added, “We’re still struggling with this hybrid work environment.”
Oakland has created a plan to make it easier and cheaper for small businesses, including retailers, artisans and restaurants, to open on ground floors downtown, said Kelley Kahn, the city’s director of special projects. And city employees must come into the office at least two days per week.
“Part of that was absolutely a desire to support downtown business and bring life back to the downtown with our own bodies,” Kahn said.
San Francisco, with the highest proportion of remote-eligible jobs in the Bay Area and most of those concentrated downtown, has seen an even more profound hollowing-out than San Jose and Oakland.
But the drop in demand for office space and cuts to lease prices – 14% lower now than at the start of the pandemic, city data show – may offer opportunity, said the city’s chief economist Ted Egan.
“Smaller companies that have been priced out of San Francisco in the past (could) find their way back in.”
A 7% drop in population since COVID started – and apartment rents down 9%, according to Apartment List – means the city may become newly affordable to some priced out before, Egan said.
In all three cities, sidewalk encampments of unhoused people, and the many residents living on the streets, can make the urban cores unappealing, and the lack of crowds doesn’t help, business leaders noted.
South San Jose resident Casey Webster attends cosmetology school in downtown San Jose and said she feels less secure. “There are just not very many people walking around here,” said Webster, 19.
Bay Area city officials are hoping companies will encourage workers to come back to offices.
San Francisco transportation planner Theresa Romell, 50, works in her San Francisco office three days a week, she said. “I don’t think I’d be happy going in five days a week but I would do it if I had to.”
Other workers say they’re never going back to full-time office work. “Nope,” said San Jose accounting administrator Leticia Mijares, 48, walking downtown with her daughters. “I have more time with my family.”
Without a substantial drop in remote work, troubles will magnify, business leaders predicted. “Our cities derive a lot of their revenue from downtown activities: sales taxes, use taxes, gross-receipts taxes, payroll taxes,” Wunderman said.
Seaver foresees a “longer-term correction” to San Jose’s economy if many workers continue to stay home. “The economy will adjust,” Seaver said, “but the pain that we’ll incur would be significant.”
Originally published at Ethan Baron