There are signs that business is improving: co-workers are changing jobs, and each open position no longer attracts a raft of overqualified candidates. At industry gatherings competitors, customers, and colleagues are no longer worried about layoffs (unless their companies are being taken over, in which case all bets are off). The commuter train is crowded despite a near doubling of the fares over the past five years. We’re beginning to wait for tables again at our favorite restaurants. Despite the war, despite the noise of national politics, and despite the spike in the price of gas, the economy is enjoying a late spring.
In San Francisco, construction proceeds apace, and brokers and landlords are hopeful that the boom in residential real estate has finally spilled into the commercial sector. And yet, and yet…..our economy appears to be undergoing some structural changes. While nationally we fear that oil prices have permanently risen, locally it may be that the need for commercial space has been permanently reduced.
The signs abound. In my department of 16 people at least three (not the same individuals each day) work from home. At the base of our office tower it is rare to see a non-food-and-beverage retail outlet stay open longer than a year. A small business can sublet prime San Francisco office space for under $30 per foot per year, less than half the cost during the pre-2001 Internet boom.
People will turn out for unique experiences, as the Giants’ downtown stadium demonstrates. But Union Square toy vendor FAO Schwarz, despite its distinctive atmosphere, declared bankruptcy, the Sony Metreon is barely hanging on (even Microsoft closed its store), and the jury is out on the Ferry Building’s renovation. In light of the history of failed or struggling projects, the $410 million risk that developers Forest City Enterprises and Westfield America are taking to raze the historic Emporium, preserve the 100-year old dome, and construct a massive shopping center on the site, is breathtaking. © 2004 Stephen Yuen
I'll visit it when it's done, but I'll keep my wallet in my pocket.