Downtown San Francisco restaurant sales are approaching pre-pandemic levels and major real estate deals are closing again, marking what local experts say is a decisive turn in the market’s recovery, despite persistent negative media narratives about the city’s decline.
“For a long time, actually, the biggest problem that San Francisco had is we had a PR problem,” says Cameron Baird, Senior Vice President at Kidder Mathews. According to Baird, the reality on the ground has been starkly different from national media portrayals, particularly over the last 18 months.
While headlines focused on crime and emptiness, Baird notes that downtown foot traffic has been steadily rebuilding. “When you talk to people that are going downtown for work in the last year and a half or so, downtown’s busy,” he explains.
This disconnect between perception and reality has created unique opportunities, according to Baird. Since January, transaction momentum has increased significantly, with multiple large real estate trades closing. “We’ve got a few buildings that we’re transacting on. We just closed escrow on one. We’ve got another large transaction that we’ve got an offer in on,” Baird says.
Perhaps the strongest indicator of downtown’s resurgence comes from the food service sector. “Just talking to some of our downtown restaurant clients, they’ve said, ‘Whoa, we’re seeing almost some pre-pandemic levels of sales volumes,'” Baird reports.
This recovery isn’t uniform across all neighborhoods. While the Financial District and Union Square continue working through challenges, other areas like Fisherman’s Wharf have been posting pre-pandemic numbers for over a year, according to Baird.
Baird credits part of the accelerating recovery to San Francisco’s new mayor and administration, which he says has implemented specific policies to signal that the city is “open for business.”
“He’s got a very specific sort of formula for how he wants to operate the city and get things back on track,” Baird says of the new mayor. This includes both concrete policy changes and a concentrated effort to shift the narrative about San Francisco’s business climate.
For investors still hesitant about San Francisco, Baird offers a clear perspective: “I don’t think you need to worry. We’re an international city, and San Francisco is always going to return.”
He acknowledges that while office rents have reset broadly, the fundamentals remain strong. “Is there going to be a price reset on some of this stuff? Yeah, there is. Rents have gone down on the broad spectrum of office product, but it’s all going to come back,” Baird argues.
For those with capital to deploy, Baird suggests the current market presents a rare opportunity. “They always say in real estate, you make money on the buy, not on the sell. And that’s what’s happening right now,” he says. “People are coming in buying low because they know on the sell they’re going to cash in.”
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