Status of the Re-Opening of the San Francisco Economy: June 2021

CITY & COUNTY OF SAN FRANCISCO Office of the Controller Office of Economic Analysis June 24, 2021 Introduction 2

. As the COVID-19 restrictions have been lifted, the Controller’s Office has begun tracking the pace of re-opening of the city’s economy. . This report is the first of a monthly series that will provide updates on sectors of the economy such as office work, tourism, small business, transportation, and real estate. Highlights of the June Data 3

. The five-county San Francisco metro area* continues to lag comparable metro areas in office attendance. . Despite improvements in the public health situation, the rate of small business closures has remained steady from March to early June. More than 45% of small businesses in the city remain closed. . Employment in the San Francisco Metro Division is recovering slowly. Total employment is still down 10% from its pre-pandemic level, and has not yet recovered to the level reached before the second wave of COVID- 19 infections at the end of last year. . However, the unemployment rate has declined substantially, and consistently, from over 12% at the start of the pandemic, to 5.1% in May of this year. . There is some positive news from the hotel industry. The city’s hotel occupancy rate has doubled since February, and average hotel rates have risen by one-third. At about 35%, the occupancy rate remains well below the pre-pandemic average, which was close to 80%.

* San Francisco, Alameda, Contra Costa, San Mateo, and Marin counties. Highlights of the June Data 4

. Similarly, enplanements at San Francisco International Airport have risen by 50% since February, but, as of April, were still only 30% pre-pandemic levels. . According to Census surveys of small business confidence, business travel is expected to pick up over the next six months, but future bookings at the Moscone Center are significantly below pre-pandemic levels. . Transportation statistics illustrate the uneven nature of the recovery. Evening freeway speeds in downtown have dropped to pre-pandemic levels, indicating the return of traffic congestion. However, BART ridership to downtown San Francisco stations was 12% of normal in May. . There are clear signs of recovery in apartment rents in San Francisco, which have risen consistently since the start of the year. Rents and building permits for new housing remain below 2019 levels, however. List of Economic Indicators 5

1. Time Spent Outside of the Home 2. Office Attendance 3. Office Vacancy 4. Small Business Sentiment: Expected Return to Normal Conditions 5. % Change in Number of Small Business Open 6. % Change in Consumer Spending 7. Total Employment in San Francisco & San Mateo Counties 8. San Francisco Unemployment Rate 9. Hotel Occupancy Rate 9. Hotel Average Daily Rate (ADR) per Night 10. Small Business Sentiment: Expected Future Business Travel 13. Convention Bookings At Moscone 14. San Francisco International Airport Enplanements 15. PM Freeway Speed 16. BART Exits at Downtown SF Stations 17. Golden Bridge Traffic 18. Average Asking Rents for Apartments 19. Building Permits Time Spent Outside Home At Highest Level Since March 2020 6

% Change in Time Spent Outside Home, San Francisco Residents, Through June 7 0%

-5%

-10%

-15%

-20%

-25%

-30%

-35% % Change in Time Spent Away from Home from Away Spent Time in Change %

-40%

-45% 3/1/20 6/7/20 7/5/20 8/2/20 1/3/21 5/9/21 6/6/21 3/15/20 3/29/20 4/12/20 4/26/20 5/10/20 5/24/20 6/21/20 7/19/20 8/16/20 8/30/20 9/13/20 9/27/20 11/8/20 12/6/20 1/17/21 1/31/21 2/14/21 2/28/21 3/14/21 3/28/21 4/11/21 4/25/21 5/23/21 10/11/20 10/25/20 11/22/20 12/20/20

Change relative to the January 2020 index period, not seasonally adjusted.

Source: Google Mobility, Opportunity Insights, https://tracktherecovery.org https://opportunityinsights.org/wp-content/uploads/2020/05/tracker_paper.pdf Office Re-Opening in the SF Metro Area Lags Other Areas 7

Weekly Office Attendance Across Selected Metros, Through June 16 60%

50% Austin Metro Los Angeles Metro San Jose Metro 40% New York Metro San Francisco Metro

30%

20% Weekly Office Attendance % Rate, Attendance Office Weekly

10%

0% 4/1/2020 7/8/2020 8/5/2020 9/2/2020 1/6/2021 2/3/2021 3/3/2021 6/9/2021 4/15/2020 4/29/2020 5/13/2020 5/27/2020 6/10/2020 6/24/2020 7/22/2020 8/19/2020 9/16/2020 9/30/2020 12/9/2020 1/20/2021 2/17/2021 3/17/2021 3/31/2021 4/14/2021 4/28/2021 5/12/2021 5/26/2021 10/14/2020 10/28/2020 11/11/2020 11/25/2020 12/23/2020

Kastle Back to Work Barometer reflects unique authorized user entries in a market relative to its pre-COVID baseline, averaged weekly. The San Francisco Metro Area includes San Francisco, Alameda, Contra Costa, San Mateo, and Marin counties.

Source: Kastle Systems Office Vacancy Rates at Historic Highs: Still Rising in Q1 8

Office Vacancy, San Francisco, Through 2021Q1 20%

18%

Office Vacancy 16% Pre-Pandemic Average, 2019

14%

12%

10% Office % Vacancy, Office 8%

6%

4%

2%

0%

Source: Jones Lang LaSalle No Significant Improvement in Small Business Re-Opening 9

Number of Small Businesses Open, San Francisco, Through June 2 0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%

-40%

-45%

-50% % ChangeinNumber of Small BusinessOpen

-55%

-60% 4/1/20 7/8/20 8/5/20 9/2/20 1/6/21 2/3/21 3/3/21 4/15/20 4/29/20 5/13/20 5/27/20 6/10/20 6/24/20 7/22/20 8/19/20 9/16/20 9/30/20 12/9/20 1/20/21 2/17/21 3/17/21 3/31/21 4/14/21 4/28/21 5/12/21 5/26/21 10/14/20 10/28/20 11/11/20 11/25/20 12/23/20

Small business transactions from several credit card processors relative to baseline index of January 4-31, 2020.

Source: Womply, Opportunity Insights, https://tracktherecovery.org https://opportunityinsights.org/wp-content/uploads/2020/05/tracker_paper.pdf But Local Small Business Sentiment Has Generally Improved 10

Percentage of Small Businesses That Expect Normal Conditions to Return in More than 6 Months, San Francisco-Oakland-Berkeley MSA, Through June 13

70%

60%

50%

40%

30%

20%

10%

% of Businesses That Responded Yes to More Than 6 Months 6 Months Than to More Yes Responded That Businesses % of 0% 8/8/2020 5/2/2020 3/7/2021 4/4/2021 5/2/2021 7/11/2020 7/25/2020 6/13/2021 6/13/2020 6/27/2020 8/22/2020 9/05/2020 9/19/2020 11/1/2020 2/21/2021 3/21/2021 4/18/2021 5/16/2021 5/30/2021 5/16/2020 5/30/2020 10/03/2020 10/19/2020 11/15/2020 11/29/2020 12/13/2020 12/27/2020 01/10/2021 01/24/2021 02/07/2021

Survey Week, Ending Source: Small Business Pulse Survey, US Census Bureau. The San Francisco Metro Area includes San Francisco, Alameda, Contra Costa, San Mateo, and Marin counties. Despite Business Closures, Resident Spending Has Recovered 11

Consumer Spending, San Francisco, Through May 16 10%

0%

-10% Day Moving Average Moving Day -

-20%

-30%

-40% % Change in All Consumer Spending, 7 Spending, Consumer All in % Change -50% 4/2/20 7/9/20 8/6/20 9/3/20 1/7/21 2/4/21 3/4/21 4/1/21 4/16/20 4/30/20 5/14/20 5/28/20 6/11/20 6/25/20 7/23/20 8/20/20 9/17/20 10/1/20 1/21/21 2/18/21 3/18/21 4/15/21 4/29/21 5/13/21 10/15/20 10/29/20 11/12/20 11/26/20 12/10/20 12/24/20 Seasonally adjusted credit/debit card spending relative to baseline spending of January 4-31, 2020.

Source: Affinity, Opportunity Insights, https://tracktherecovery.org https://opportunityinsights.org/wp-content/uploads/2020/05/tracker_paper.pdf Total Employment in San Francisco Area Still Down 10% 12

Total Employment, San Francisco Metro Division, Through May 1,300,000 Total Employment 1,250,000 Pre-Covid Average, 2019 1,200,000

1,150,000

1,100,000

1,050,000

1,000,000 Employment 950,000

900,000

850,000

800,000

750,000

700,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21

Source: California Employment Development Department (EDD). The San Francisco Metro Division includes San Francisco and San Mateo counties. However, San Francisco Unemployment Has Dropped to 5.1% 13

Unemployment Rate, San Francisco, Through May 14%

Unemployment Rate 12% Pre-Covid Average, 2019

10%

8%

6% Unemployment Rate, % Rate, Unemployment

4%

2%

0% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21

Source: California Employment Development Department (EDD). The San Francisco Metro Division includes San Francisco and San Mateo counties. Hotel Occupancy Rate is Rising – Doubled Since February 14

Hotel Occupancy Rate, San Francisco, From October 10, 2020 to June 12, 2021 100 Occupancy (TRI) 90 Pre-Covid Average, 2019

80

70

60

50

40 Occupancy (%) Occupancy

30

20

10

0 1/2/2021 1/9/2021 2/6/2021 3/6/2021 4/3/2021 5/1/2021 5/8/2021 6/5/2021 11/7/2020 12/5/2020 1/16/2021 1/23/2021 1/30/2021 2/13/2021 2/20/2021 2/27/2021 3/13/2021 3/20/2021 3/27/2021 4/10/2021 4/17/2021 4/24/2021 5/15/2021 5/22/2021 5/29/2021 6/12/2021 10/10/2020 10/17/2020 10/24/2020 10/31/2020 11/14/2020 11/21/2020 11/28/2020 12/12/2020 12/19/2020 12/26/2020

TRI (Total Room Inventory) takes in to account all the hotel rooms in the city, whether open or closed.

Source: STR Average Daily Rate Has Risen by One-Third Since February 15

Hotel Average Daily Rate (ADR) per Night, San Francisco, Through June 12 $400 ADR ($) $360 Pre-Covid Average, 2019 $320

$280

$240

$200

$160

$120 Average Daily Rate per Night ($) Night per Rate Daily Average

$80

$40

$0 4/4/2020 5/2/2020 8/8/2020 9/5/2020 1/9/2021 2/6/2021 3/6/2021 4/3/2021 5/1/2021 4/18/2020 5/16/2020 5/30/2020 6/13/2020 6/27/2020 7/11/2020 7/25/2020 8/22/2020 9/19/2020 10/3/2020 1/23/2021 2/20/2021 3/20/2021 4/17/2021 5/15/2021 5/29/2021 6/12/2021 10/17/2020 10/31/2020 11/14/2020 11/28/2020 12/12/2020 12/26/2020

Source: STR Significant Increase Since February in Business Travel Plans 16

Expected Future Business Travel, National Survey, Through June 13 40% Question

y 35%

30%

25%

20%

15%

10%

5%

0% Percentage of Businesses that Responded Yes Surve to the Yes Responded that Businesses of Percentage 3/7/2021 4/4/2021 5/2/2021 5/9/2021 6/6/2021 2/21/2021 2/28/2021 3/14/2021 3/21/2021 3/28/2021 4/11/2021 4/18/2021 4/25/2021 5/16/2021 5/23/2021 5/30/2021 6/13/2021

Survey Week, Ending

Source: Small Business Pulse Survey, US Census Bureau The San Francisco Metro Area includes San Francisco, Alameda, Contra Costa, San Mateo, and Marin counties. At Present, Little Recovery in Future Moscone Bookings 17

Convention Bookings at Moscone, Through SF Travel 450

400

350 333

Events 300 Pre-Pandemic Average, 2019 250

200

150 Number of Events

100 60 64 48 39 50 30 20 24 26 24 24 11 11 14 17 10 10 0 7 5 0

F: Future Confirmed Events The numbers include both Moscone events and Self-Contained events that were booked through SF Travel.

Source: SF Travel 50% Growth at SFO Since February, But Well Below Normal 18

Enplanements at San Francisco International Airport, as % of 2019, Through April 110%

100%

90%

80%

70%

60%

50%

40%

30%

20% Total Enplanements as a % of the Same Month in 2019Month Same the of % a as Enplanements Total 10%

0% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21

Source: San Francisco International Airport (SFO) Freeway Speeds Have Returned to Pre-Pandemic Levels... 19

Average PM Freeway Speed, San Francisco, Through June 8 70

PM Freeway Speed, MPH (All Segments Combined) 60 Pre-Covid Average Speed, 2019

50

40

30

20 Average Auto Speed, MPH MPH Speed, Auto Average

10

0 3/3/2020 6/9/2020 7/7/2020 8/4/2020 9/1/2020 1/5/2021 2/2/2021 3/2/2021 6/8/2021 3/17/2020 3/31/2020 4/14/2020 4/28/2020 5/12/2020 5/26/2020 6/23/2020 7/21/2020 8/18/2020 9/15/2020 9/29/2020 12/8/2020 1/19/2021 2/16/2021 3/16/2021 3/30/2021 4/13/2021 4/27/2021 5/11/2021 5/25/2021 10/13/2020 10/27/2020 11/10/2020 11/24/2020 12/22/2020

Source: San Francisco County Transportation Authority (SFCTA) ...But BART Ridership, While Growing, Still 12% of Normal 20

Monthly BART Exits At Downtown SF Stations, as % of 2019, Through May 14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0% Weekly Average Ridership as a % of the Same Month in in 2019 Month the Same % of a as Ridership Average Weekly

0.0% Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21

Source: BART Golden Gate Bridge Traffic Also Remains Below Normal 21

Total Monthly Golden Gate Bridge Traffic (South-Bound), San Francisco, Through May 2,000,000

South-Bound Traffic 1,800,000 Pre-Covid Average, 2019

1,600,000

1,400,000

1,200,000

1,000,000

800,000 Total Total SouthBound Traffic

600,000

400,000

200,000

0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21

Source: Golden Gate Bridge Highway and Transportation District Apartment Rents Recovering After Deepest Drop in the U.S. 22

Average Asking Apartment Rent, San Francisco, Through May 0%

-5%

-10%

-15%

-20%

-25% % Change in Average Asking Rent Since the Same Month in in 2019 Month Same the Since Rent Asking Average in % Change -30%

Source: ApartmentList ...But Housing Building Permits Are Below 2019 Levels 23

Number of Housing Units Permitted, 3 Month Moving Average, San Francisco, January 2020 - April 2021 500

Number of Housing Units Permitted 450 Pre-Pandemic Average, 2019 400

350

300

250

200

150

100

50 Number of Housing Units Permitted, 3 Month Moving Average Moving Month 3 Permitted, Units Housing of Number

0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21

Source: U.S. Department of Housing and Urban Development (HUD) Staff Contact 24

Ted Egan, Ph.D., Chief Economist [email protected]

Asim Khan, Ph.D., Senior Economist [email protected]