A mid-week end-of-day workplace get-together typically isn’t cause for a major celebration—at least not before the pandemic. But Google’s San Francisco event marking its return to the office featured multicolored balloon centerpieces, a ready-made Instagram background with dozens of suspended glasses of champagne and remarks from the mayor.
“We’re here today because it’s important that you all know we want you back,” Mayor London Breed said during the event at One Maritime Plaza, site of the company’s newest SF office space. “We want you back in person. We want you back in our city. We want you back in our communities. We want you back together doing all the fun, creative things that you do. Let me tell you if I were working for Google, I would be at work every day.”
The kickoff party featured a couple of hundred Google employees picking at canapes and enjoying the open bar in an outdoor plaza that shifted from sunny to chilly in typical San Francisco fashion.
So how successful has San Francisco been at enticing workers out of pajamas and into the workplace? According to office occupancy data provided by keycard company Kastle, the percentage of in-office workers for the week of April 20 hovered around 33.4%, which puts the city ahead of both the New York and San Jose metro areas, although below the 40.5% average of 10 major metros across the country.
While the number has more than doubled from the levels seen at the beginning of the year, it’s somewhat of a mixed result. Last week’s occupancy rate represented the first week-over-week dip in occupancy levels in 2022 from 34.6% the week prior, which could be attributed in part to rising local Covid cases.
Cheerleaders of the return to cubicles point to promising signs like the fact that Bay Bridge crossings in March have roughly rebounded to pre-pandemic levels and weekday BART ridership is at its highest level since March 2020.
There’s also some evidence that—after two years of cramped home offices, Zoom calls and incessant Slack messages—workers have begun to shift their opinions on remote work. “Enthusiasm among workers for working from home after the pandemic has waned somewhat since late 2020,” according to the Survey of Working Arrangements and Attitudes (SWAA) from economists at Instituto Tecnológico Autónomo de México, Stanford University and the University of Chicago.
But the absolute numbers of office workers coming in on any particular day remain a fraction of the pre-pandemic population. Recent news like Paypal’s decision to shut down its San Francisco office is adding to the evidence that a hybrid or remote schedule for many companies is here to stay. The SWAA found San Francisco office workers plan to reduce the number of days they spend in the office by 53%, the most in the country.
It’s yet to be seen where in-office occupancy will eventually settle out, but in a signal that the city has started to contend with the persistence of remote work, the city’s budget office notched up its estimate of how often office workers will telecommute when the in-person return to the office stabilizes from 15% to 33%.
Those realities are running headlong in Breed’s efforts to drum up support from business leaders to get workers back to the office. That included a week-long period of programming downtown between March 27 through April 3 dubbed Bloom SF, which included art installations and events like stand-up comedy shows, food trucks and outdoor fitness classes.
Bloom SF was coordinated with “Welcome Back to SF,” which involved city and county employees returning to the office in March, along with pledges from a number of major employers to bring employees back to in-office work in March, including Salesforce, Gap Inc., Visa, Wells Fargo and BlackRock. But the majority of these major employers are not committing to bringing back workers every day.
Salesforce—the city’s largest private employer—said as of mid-March, only around 25% of San Francisco-based employees came into the office. Wells Fargo, which employs around 5,900 people in the city has adopted a hybrid model with most workers expected to work at least three days a week in the office. Technology workers, however, are given more flexibility.
The staggered return of office workers has direct implications for major parts of San Francisco’s tax base, which is heavily reliant on business taxes and taxes tied to real estate transactions and occupation. The lack of economic activity downtown has also translated to major declines in sales tax revenue centered on San Francisco’s downtown.
The biggest decline in sales tax revenue was seen in the zip code 94111, which encompasses parts of the Embarcadero and the Financial District. The area showed a precipitous 58% drop between 2019 and 2021, falling from $8.3 million to $3.4 million.
That number is a result of less spending for service providers for office workers like gyms, restaurants and bars. According to the SWAA, an average San Francisco office worker is projected to reduce annual spending around the office by $5,293 because of remote work.
“When I think about the fact that you haven’t been here, it really empowers me to push harder to try and get you to want to come here,” Breed said at the event. “We don’t want these businesses to go away because, when you do decide finally, you’re going to come back to work and they’re gone. It’s gonna be sad.”
To uplift the lagging restaurants and service businesses supported by office workers, Google has underwritten a new sponsorship of the Golden Gate Restaurant Association that will provide discounts throughout May for the company’s employees at a dozen downtown restaurants, including Perbacco, China Live and Trestle.
“We’ve tried everything we can over the last two years to try and get restaurants to survive, and with the closures, it’s been really tough. You guys are who we need to go back to eat and drink,” said Laurie Thomas, the executive director of the Golden Gate Restaurant Association. “We’re going to see how successful it is, and hopefully, you’ll tell us if this is a program worth doing and spreading throughout the city.”
Block, the financial technology company formerly known as Square, indicates a larger movement away from downtown offices, ditching its San Francisco headquarters in its transition to a “distributed work model.”
At the company’s previous HQ at 1455 Market Street, three out of five of the ground floor retail properties are unoccupied, victims of the pandemic slowdown in business.
Katherine Chiao is a co-owner of Kagawa-ya Udon, one of the two remaining restaurants. After remaining closed for indoor dining for much of the past two years, the restaurant reopened its dining room about a month ago. Since then, they’ve seen a marginal increase in business, but total revenue is still only around 30% of pre-Covid levels.
Even city employees, which used to make up around a third of her customers, have not returned in a major way.
Chiao and her business have seen little impact from the city’s efforts to attract workers back thus far. Still, she’s hoping that officials can help by encouraging employees to come into the office, activating her storefront’s stretch of Market Street, and addressing the street conditions that have become a deterrent for foot traffic and a concern for her employees.
The hybrid schedule adopted by many companies has also thrown familiar business patterns out of wack, elongating the weekend and shortening the downtown workweek to Tuesday through Thursday. There’s also increased inconsistency. Chiao said there was a 40% difference in receipts between this Wednesday and last week. When asked why, she just shrugged.
“In the very beginning, everyone was hoping for a return to the sense of normalcy, but now we have this new normal, and the businesses have not adjusted,” Chiao said. “They said people would come back last September, then it was March, and now they’re saying May. But I’m not so sure about that.”
The post Mayor Breed Cheers Google’s New SF Office Amid Pretty Meh Return-to-Work Numbers appeared first on The Paloalto Digest.
