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If you thought you never could afford to start a business in San Francisco, think again.
Many companies based in the San Francisco Bay area switched to remote work during the COVID-19 pandemic and haven’t fully returned to their downtown offices. Stores and restaurants that depended on workers closed, too. Now, there are plenty of empty office buildings and retail space, and, the way Ted Egan sees it, plenty of opportunity.
As the chief economist for the city and county of San Francisco, Ted is an expert on the subject. Here, he shares why he thinks businesses moving to or starting up in the region are now poised for growth.
Office and retail space is more affordable
While real estate is still hot in many other markets around the US, demand in San Francisco has softened. “These office buildings that were 95% full before the pandemic are 50% full now,” Ted says, citing that many companies had to downsize to accommodate hybrid work schedules.
The city, though, has come up with creative ways to entice other businesses to move in. “They are encouraging retailers to open up pop-up spaces, and actually providing financial support to do so, in the the vacant storefronts of office buildings downtown,” Ted explains. “It’s a way of letting startups and small businesses have an opportunity to get prime retail space as downtown recovers, without a major financial commitment.”
The city is full of early adopters
One of the things that made San Francisco companies like Allbirds and Third Love so successful is that the market is full of people who are open to trying new products and have the income to do so. “For people with bold ideas of lifestyle and related [products], it’s a great place to start a business from the market opportunity side,” Ted says.
This doesn’t just apply to early adopters of technology. Ted points to San Francisco’s tradition of launching retailers, and emphasized the opportunity for more diverse businesses outside of the tech sector.
Highly skilled workers stayed in San Francisco
San Francisco lost a small percentage of its population over the past few years, as young graduates and low-wage workers moved out of the city.
Tech layoffs played a part in that, too, but Ted says they didn’t see a brain drain. Most tech workers stayed in the San Francisco area and the venture capital industry remains strong. As such, the Bay Area remains a good place to hire highly skilled workers and get funding for a startup.
The shift to work from home has also helped alleviate some of the city’s biggest impediments. Subways that were full to capacity before the pandemic are not overcrowded anymore. And, housing prices are coming down, making it more feasible for people to move closer to work.
Ted is optimistic about the city’s growth in the long term. “We’ve had so many stories of San Francisco going through an economic challenge, and then five or 10 years later, it’s booming again.”
To hear more about the state of downtown San Francisco and what the city is doing to help small businesses, listen to Ted Egan’s full interview on Shopify Masters.
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