Tuesday, January 5, 2010
Could cities like San Francisco become the new Detroit?
Walking around San Francisco I notice that the landscape is changing. It feels like air being slowly released from a balloon. The energy level is dropping. Storefronts, particularly boutique stores, are closing one by one. And it's not just the new stores either. I was surprised to find one of my favorite bookstores, Abandoned Planet at 518 Valencia, having a last day going out of business sale. Abandoned Planet was an established bookstore that I first noticed 13 years ago in the heart of the Mission District. Ti Couz, my favorite Creperie had a sign in the window, indicating how hard it has been to stay open, how their business is struggling, and how they had to let a good part of their staff go. I fact, it was the first Sunday in memory that I didn't have to wait in line to be seated. Everywhere I look I see businesses empty or having a going out of business sale. Restaurants are reducing their hours. Established businesses that have been operating for years are disappearing. Some shops are selling goods in flea market fashion on sidewalks in a desperate attempt to try to sell their goods.
People aren't buying because jobs have been lost and money is becoming scarce. San Francisco is just too expensive and people are cutting back. It's happening in the sprawl too. Driving in suburban Sacramento last week I counted 32 vacated strip mall storefronts. So maybe it isn't just San Francisco but California as a whole. I watched the same thing happen in Spain as the economy came screeching to a crawl in early 2009. In my adult life I have never seen an economy this bad, yet I keep hearing the cheerleaders of the media celebrating that things are getting better. I have to wonder what exactly are they all smoking? Because from my point of view things keep sliding downwards and that's scary because at my core I'm an optimist.
With all that I am seeing, I have to think that we are on the verge of a secondary crisis. The shoe that is the commercial real estate crisis, has yet to drop. When it does, we might find ourselves in a worse fiasco then we found ourselves in when the residential mortgage crisis hit. But the way I see it is that if people don't have jobs, they don't have money, and if people don't have money they don't shop. And if people don't shop we don't have jobs. And the people that do have jobs are spending less because they are often overextended and are being raked over the coals by an increasingly powerful banking industry which is beginning to attack people with higher fees and interest rates. And so begins the chess game between bankruptcies, corporate book cooking, financial organizations, lobbyists and all their pocketed politicians, trying to find a new level on which to have the upper hand.
And what will happen when storefronts sit vacant and when people choose to stay home for lack of funds? What will happen when services are cut back and crime increases? What will happen when cities like San Francisco, which repelled old school and established families and never attracted new families who could plant roots, become less interesting? What happens when these cities of the creative class which operated like a Ponzi Scheme built on newcomers, becomes boring, loses its appeal and becomes ultimately unsustainable? What happens when a lack of an urban policy guts the cities even further? Could the cities of the creative class, like New York and San Francisco become the new Detroit? The decade that begins with 2010 could be very interesting indeed.