The latest economic report from the San Francisco Controller’s Office shows some encouraging signs of recovery, even as the city continues to feel the impacts of the recent tech downturn.
Employment Decline Leveling Off
While San Francisco lost 21,000 jobs in the December to February period, most of those losses were seasonal and related to temporary holiday hiring.
The remaining job cuts were concentrated in the struggling tech sector, where layoffs are still ongoing. The city’s unemployment rate edged up slightly to 3.8% in February.
All the headlines are screaming “21,000 Lost Jobs!” Don’t buy it. Again, these losses were seasonal. Overall, our job market is solid.
Return to Office Continues
Despite the hit to office employment, other indicators point to a continued return to urban workplaces. Both MUNI metro and BART downtown ridership improved in early 2024, as did measurements of office attendance tracked by building security firms.
This suggests the city’s return-to-office trend is still moving forward, even with fewer local office workers.
Tourism Recovery Underway
The vital tourism sector is showing clear signs of revival. Hotel occupancy rates recovered from their usual seasonal dip over the holidays. San Francisco’s hotel revenues in February reached 65% of pre-pandemic 2019 levels, outpacing cities like New York. Air travel data also reveals a strong rebound, with international passenger volumes at SFO now exceeding 2019 volumes.
I got to be a tourist in my own city when I reviewed the Hyatt Regency Embarcadero last year, and wandering the Embarcedero was lovely.
Mixed Housing Signs
In the housing market, apartment rents have risen 1.5% since January as vacancy rates decline, indicating strengthening rental demand. However, home prices for both single-family houses and condos in San Francisco have yet to recover from recent declines. Residential construction permitting has also slowed in early 2024.
‘Course, that’s not necessarily a bad thing if you, you know, actually want to afford to live here!
While challenges remain, particularly around weakening employment in high-wage sectors like tech, the latest data suggests San Francisco’s economy is slowly mending from the impacts of the pandemic and economic turbulence of the past few years. The city’s vibrant tourism industry and urban dynamism appear to be reasserting themselves as catalysts for broader recovery.
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