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SF orders workers to go 4x a week in-office (www.sfgate.com)

submitted 1 month ago by [email protected] to c/[email protected]

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San Francisco Mayor Daniel Lurie is ordering thousands of city employees back to the office at least four days a week, part of a move to strengthen city services while injecting life into the city’s struggling downtown.

In a memo obtained by SFGATE, Lurie set an April 28 deadline for full implementation, directing the Department of Human Resources to oversee the transition. The order primarily affects around 10,000 office-based employees who currently work hybrid schedules.

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[–] [email protected] 11 points 1 month ago (1 children)

All of that is a thing to be addressed by making people want to go downtown, not forcing them to at their personal expense.

If downtown commercial retail space becomes worth less, then it might become more attractive to incorporate residential spaces intermixed with the businesses. That would reduce the need for commuting, which is the primary problem with centralized business districts.

[–] [email protected] 1 points 1 month ago

It's a chicken-and-egg problem though: No visitors without interesting places to spend money, but no interesting places without visitors.

The mayor is doing what he can within his power, i.e. control over city employees, but it'll be a wait-and-see to find out whether it works, or at least how much it works.

You're right that commercial retail space should be worth a lot less in both capital value and rent than it used to.

But we're in a weird situation where there's little incentive, or there are even counter-incentives, for commercial building owners to lower retail rents.

For example, part of a commercial building's valuation is how much they can charge for rent. If they list a space at say $100/sq ft, the building is valued at such. If they actually rent it out at $50/sq ft, the building's value goes down by about half. This de-incentivizes lowering rents in down markets because that would lower the value of the asset.

Another is Prop 13, which limits the rise of property tax on commercial buildings to 1 percent of assessed value per year, which is much lower than inflation. Under Prop 13, commercial buildings are re-assessed when ownership is transferred. Commercial buildings are increasingly owned by corporate entities, because it is better to buy the ownership entity in order not to trigger the property tax re-assessment. This de-incentivizes lowering rents because the ownership entity is not under financial pressure to rent the space out because the property taxes are so low in relation to its actual value.

That's my un-educated understanding of the situation anyway.