Nearly Half of S.F. Small Businesses Remain Closed, Office Visits Lag: Report

  • Despite San Francisco's progress on vaccinations and reopening, about 45% of small businesses remain closed, marking no significant increase since March 2021

  • Likewise, most office workers are continuing to work remotely, with card swipe data showing less than 20% office occupancy in June

  • Consumer spending in San Francisco has mostly bounced back to pre-pandemic levels, however

A new report from the San Francisco Controller's Office, which is tracking the City's reopening on a monthly basis, found that the rate of small business closures has remained steady since March despite a much-improved public health situation.


San Franciscans are leaving the house more and spending nearly as much money as they did before the pandemic, according to cell phone and credit card data captured in the report. Despite this, about 45% of small businesses that existed before the pandemic remain closed, marking no significant uptick since March, when vaccinations kicked into gear and San Francisco's pace of reopening accelerated.


San Francisco has among the highest vaccination rates in the country, with 81% of residents over age 12 having received at least one dose of a vaccine.


City officials have sought to lure tourists and business travelers back, in part, by highlighting the low-risk COVID environment and strong safety protocols at conventions and other events. San Francisco plans to allocate millions for rental discounts at Moscone Center, which accounted for about 21% of the City's overall tourism industry pre-COVID.


Travel into San Francisco is ticking up, according to recent data on flights, hotels and business travel. Although still far below pre-pandemic levels, enplanements at San Francisco International Airport have risen 50% since February. Nightly hotel occupancy has recovered to an average of about 35%, and more businesses are making travel arrangements.


Bookings at Moscone, however, remain very low: The center held more than 300 events in the first quarter of 2020, but expects just 64 in the first quarter of next year. Current bookings suggest that number could remain depressed for years to come.


Likewise, office employees aren't rushing back to in-person work. Continuing a trend observed by Public Comment earlier this year, San Francisco—which has a high percentage of remote-eligible workers—has the lowest rates of office occupancy of any large city in the country. That could carry big implications for the City's downtown, which accounted for about 40% of total jobs in San Francisco before the pandemic.


San Francisco is expecting a budget surplus for the next fiscal year, owing mostly to an infusion of COVID recovery funds from the federal government.


However, the speed and shape of the City's local economic recovery remains an open question.


“Business and hotel [taxes] have a long way to recover,” said Carol Lu, a revenue manager at the Controller’s Office, at a recent budget hearing.


The office noted that hotel taxes may not recover to pre-pandemic levels until 2025 or 2026. Likewise, business tax collections could be impacted longer term if remote work takes hold permanently. Currently, the Controller's office projects that 25% of San Francisco’s workforce will telecommute on a permanent basis after the pandemic subsides.


The City's major employers appear to have mixed plans on in-person work, with some, like tech firm Twilio, saying that it will encourage in-person work after the Labor Day holiday. Others are making permanent remote work an option for many employees.


As of June 9, weekly office attendance in the San Francisco metro area was under 20% according to Kastle systems, a building access firm.

Image by Jake Buonemani
Image by Rasmus Gundorff Sæderup
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