Ever since covid forked our collective timeline, the urban doom loop has been a consistent feature of The Discourse™. Some of that has come from urbanist commentators. Some of it was picked up by online culture warriors trying to dunk on “democrat run cities”.

But for all the coverage about political mismanagement and bureaucratic incompetence, there are underlying mechanisms that have prevented cities across the U.S. from quickly adapting to the post-covid world.

For the purposes of this conversation, I’m going to focus on San Francisco. Partly because San Francisco is what I'm most familiar with, but also because lessons from SF’s experience have applicability to other cities as well.

Explaining the Doom Loop

Before 2020, downtown San Francisco (on a weekday) was packed. Something like 470,000 people used to commute into the city for work every day. Then covid + remote work happened and that world disappeared.

Tech companies — the main drivers of downtown employment — went remote and workers stopped coming into the office. Many employees even relocated out of the region entirely (especially in the beginning when they were eager to take Bay Area salaries to Boise or Colorado Springs).

We might call that the doom part. What followed next was the loop bit.

As white collar work left, the service sector dried up as well; without a critical mass of tech workers, the downtown market for $30 shawarma imploded. And as demand for commercial space — retail, restaurant, and office — evaporated, commercial real estate got put over a barrel.

In the heady days of 2019, commercial vacancy rates fell to 4.7%. Today, they’re consistently above 30%.

Obviously, this isn’t great for commercial landlords, but it’s also been bad for municipal finances. San Francisco relied heavily on taxing commercial leases and property sales, two wells that have all but dried up at this point.

Bigger picture, the city’s tax structure assumed the world would continue on as it had since 2010. That train has jumped its tracks and private sector problems have cascaded into public sector budget shortfalls.

Contra Econ 101

For those of us with just the wrong amount of economics education, this may be the part of the story where something feels a little off.

It’s been several years since remote work started in earnest and the...

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