With San Francisco facing record high commercial positions, a mayoral candidate has a plan to reshape the city’s business district and surrounding areas.
Democrat Mark Farrell, a former interim mayor, is proposing a 20-year vision to revitalize downtown San Francisco in an effort to help the city recover from challenges exacerbated by the pandemic. His plan includes a new park at Embarcadero Plaza and mixed-use buildings that provide more housing options.
It also proposes tax incentives for businesses that move to the area and for those that require workers to return to the office four days a week. The goal is to incentivize industries beyond technology.
“As I’ve traveled around the world and our country over the last few years for work, other centers and other cities have recovered from Covid,” Farrell said in an interview with CNBC. “Unfortunately, our city now ranks last in post-Covid economic recovery. And this, for me, is a shame and must change.”
Commercial real estate vacancies in San Francisco hit a new high of 34.5 percent in the second quarter, according to a Cushman & Wakefield report last week, up from 5 percent before the pandemic. The vacancy rate in Manhattan for the quarter was 23.6%. Farrell’s goal is to cut San Francisco’s vacancy rate in half by the end of his first term.
A key part of Farrell’s plan involves bringing workers back to the city. Many of San Francisco’s top employers including; Salesforce, Uber and Visa, have embraced hybrid working, with staff coming in, at best, three days a week. Additionally, the tech industry has been hit by layoffs over the past two years, taking thousands of people off the payroll.
Under Farrell’s proposal, businesses that relocate downtown would receive a gross receipts tax incentive, as would companies that require employees to come into the office four days a week. Such mandates have faced pushback in some cities, most recently in Philadelphia, where unionized workers missed an offer to further extend a personal work deadline.
“Right now, if you come downtown, the thing is, the lack of people, it’s a shell of what it used to be,” Farrell said. The incentives are designed to ensure that “employees come back to work multiple days a week in the office to create that vibrancy that will really bring the future of downtown forward,” he said.
Public safety is a major concern, as parts of downtown San Francisco are rife with drug use and homeless encampments. Farrell is calling for an increase in police staffing, adding that safety and road conditions affect every neighborhood beyond San Francisco’s downtown core.
On Tuesday, Elon Musk said it is movement the headquarters of X, formerly known as Twitter, in Austin, Texas, from San Francisco. X had already looked into subleasing most of his building to the city and Musk was posted at X on Tuesday, “We’re fed up with dodging gangs of violent junkies just to get in and out of the building.”
Conventions and tourism have also been slow to return to the city since shutdowns that began in early 2020. The park at Embarcadero Plaza would be part of a plan to bring some of that back, Farrell said. He envisions a clean and open park outside the Ferry building to attract workers, residents and tourists. He likened it to Mission Dolores Park, a San Francisco landmark.
An image commissioned by mayoral candidate Mark Farrell’s campaign to show its plans for a new “world-class” park on the Embarcadero in the future.
Courtesy: Farrell for mayor commissioned by Gensler
For housing, Farrell’s plan includes “aggressive tax-increment financing” and local incentives to speed up housing development as well as the conversion of commercial buildings to homes. Farrell also seeks to increase height limits in neighborhoods like the Financial District, SoMA and Mission Bay to create “tens of thousands” of new units and residents and encourage more housing in places like Union Square, which recently lost major tenants including Macy’s and Nordstrom;
Farrell said the concept is similar to New York Hudson Yards, which opened before the pandemic. That project was criticized for its hefty price tag, but has since become a success story with lower office vacancies than other Manhattan neighborhoods. Farrell said his proposal promises to be a source of revenue for the city, but that it needs anchor projects.
“Right now the problem is downtown,” Farrell said. “We don’t have people working here. And it’s a ghost town. And that translates into lost sales tax revenue, property tax revenue that drops significantly when buildings sell for 10 or 20 cents on the dollar. At the end of the day, they arising from commercial property taxes put a huge hole in our budget here in San Francisco.”
Farrell is just one of several well-known local candidates, including incumbent Mayor London Breed, philanthropist Daniel Lurie and Board of Supervisors Chairman Aaron Peskin. According to website of the municipal authority13 people qualified for the mayoral elections in November.
— CNBC’s Ari Levy and Jordan Novet contributed to this report.
