San Francisco Aims to Fill Downtown with "Pop-Up" Hangouts

San Francisco is coming up with creative ways to address the emptiness of its downtown, which is struggling to shake a “ghost town” label since tech employers embraced remote work and began hollowing out office buildings.

With more than 40 vacant storefronts, the city has launched a non-profit program called Vacant to Vibrant—a series of hip new “pop-up” stores the city is hoping will make downtown the “it” spot to hang out, according to a report from KRON4, a local TV affiliate.

The program, which will be managed by the San Francisco Office of Economic and Workforce Development with a budget of $710K, is part of Mayor London Breed’s downtown recovery plan.

Ideas for pop-up initiatives that will get people to hang out in San Francisco can be pitched on the economic development office’s website. (Sorry, the idea of declaring a “Summer of Love” in 2023 and churning out tie-dyed T-shirts and flower headbands is already taken.)

The portal, which opened on Monday, already has received 53 applicants, the TV outlet reported, including a Singaporean fast-food outlet, a mocha café and a sake and wine bar.

Pop-up grants range will range from $3,000 to $8,000; the Vacant to Vibrant program says its team will “take care of logistics.” (A VW bus with a peace sign covering the VW logo?)

The city says it will choose the winning bids in June for what will be the first of three phases that will feature 10 to 15 pop-ups opening in each phase.

Unfortunately for San Francisco, whatever street traffic the pop-ups can generate is unlikely to include office workers pouring out of buildings at Happy Hour on a hybrid summer evening.

Nearly a third of the offices in the Golden Gate City are empty, a vacancy rate approaching 30% in Q1 2023.

As major tech players retreated from offices in San Francisco throughout 2022, the vacancy rate in the city grew by more than 10%; it’s grown by an additional 2% since the end of last year, according to a new report from CBRE.

Empty offices now encompass 27M SF in San Francisco, eight times the amount in 2019, when vacancy was 5%. Available space has risen above 34%, including the growing amount of offices listed for sublease that are not yet vacant.

The amount of office space on the market for sublease is approaching 10M SF. More than 900K SF was listed in Q1 2023, including substantial listings from Pinterest, Meta and Slack.

Salesforce, San Francisco’s largest employer, listed for sublease last summer about 412K SF of the 817K SF Salesforce West tower on Fremont Street as the tech company shifted to hybrid work.

Negative absorption totaled 1.8M SF in the first quarter. Compounding these dismal results are an ongoing wave of expiring leases involving anchor tenants who are looking to downsize, especially tech players who have embraced remote work, CBRE said. Expiring sublease spaces that provided rent revenue turn into direct liabilities for landlords.

An increasing number of older San Francisco office properties are in distress, with building owners unable to make payments or to refinance as loans come due amid rising interest rates.