Controller's economist: 2020 outmigration and a plunge in rents reshape San Francisco recovery

Ted Egan of the Controller's Office told the Budget and Appropriations Committee on Feb. 17 that San Francisco's pandemic economy shows a sharp divergence between sectors and neighborhoods, with migration and rental markets likely to shape the city's near‑term recovery.

Egan said unemployment in the two‑county metro area (San Francisco and San Mateo) spiked to over 12% in April 2020, and by December had partly recovered; roughly 80,000 jobs remained lost from the pre‑pandemic peak. He attributed recovery differences to sectoral patterns: professional, scientific and technical services had nearly recovered by late 2020, while restaurant employment remained roughly 40% below pre‑COVID levels.

On migration, Egan summarized United States Postal Service change‑of‑address requests (as reported in Chronicle data) and said the city saw tens of thousands more outbound than inbound address requests in 2020—“at least an extra 35,000” outbound requests—although he cautioned the data show addresses, not household counts or demographics. He said most moves were to nearby Bay Area counties rather than long‑distance relocations to other tech centers.

Egan said that apartment rents in San Francisco fell between about 25% and 30% year‑over‑year by January 2021, one of the largest declines among major U.S. cities. Zillow and other trackers showed smaller declines in owner‑occupied housing (condos down roughly 6%, single‑family homes down about 1%), but Egan warned condo inventories were growing, a potential signal of further declines.

On offices, Egan cited CBRE data showing roughly 7 million square feet of office space given up in Q4 2020 and overall vacancy north of 16%, largely driven by sublease availability. He said some employers were rethinking long‑term office needs as remote work grows, which could depress downtown demand for services that support offices and tourism.

Supervisors pressed Egan on the limits of the migration data and asked who benefits from lower rents. Egan and several supervisors noted a mix of winners and losers: falling rents may allow some middle‑income residents to return or move within the city, but service workers, hospitality employees and other lower‑wage workers who have lost income or accumulated rent debt remain at risk. Egan said federal, state and local policy choices—including stimulus and rent‑relief measures—will be central to working‑class outcomes.

Egan emphasized uncertainty: if many office employees remain remote long term, downtown spending and related employment will be slow to recover; if out‑migrants remain regionally nearby, commuting patterns or returning to offices on hybrid schedules could narrow economic damage. He recommended the committee pursue additional, finer‑grained data (ZIP‑code or census‑tract moves and neighborhood rent indicators) in follow‑up briefings.

The committee did not take action on these data today but used the discussion to frame upcoming budget priorities and requests for further analysis.