Twitter is in turmoil. Uber and Block are leaving. Here’s how S.F.’s Mid-Market could bounce back

But a 2011payroll tax breakfor much of the neighborhood and an unprecedented tech boom transformed it into one of theworld’s premier office hubs,home to the headquarters of Twitter, Uber and Block (formerly Square), along with Dolby, Zendesk andReddit. Some 10,000 jobs were added before the tax break expired in 2019.

Times have changed.

Elon Musk’stermination last week of a $44 billionoffer to buy Twitter is another dose of uncertainty with Mid-Market at another crossroads — the pandemic and a tech worker exodus created an economic crisis with a tough path to recovery.Twitter, the area’s biggest private tenantand occupant of the 1937 former furniture mart, is already letting workers stay home forever and recently enacted ahiring freeze and layoffs.

One block west, at 1455 Market St.,Uberhas left the neighborhood for a new Mission Bay headquarters andBlockwill depart next year when its lease expires, citing the need for less office space in the age of remote work. With thousands of workers staying home or leaving the city, Mid-Market has been hollowed out as a tech hub.

The rise and fall of Mid-Market mirrors the struggles of downtown San Francisco in the age of remote work, and the concerns around public safety, homelessness and drug use that have afflicted the area for decades. It has been a relentless challenge for city leaders, local businesses and residents. But those who have worked in the area say a decade of investment means there’s an opportunity to come back stronger with new residents and entrepreneurs.

At the end of the second quarter, Mid-Market’s office vacancy rate was 24.5%, with 5 million square feet of offices for lease, the third-highest percentage among city neighborhoods after Jackson Square and South of Market, according to real estate brokerage Cushman & Wakefield. The north Financial District, San Francisco’s historic downtown, was faring slightly better at 23% vacancy.

It has been worse: Mid-Market and its surrounding areas had a record high vacancy rate of 38.2% in early 2003, soon after the dot-com crash.

With the pending departures of Block and Uber, whose leases expire in 2023 and 2025, respectively, landlords Hudson Pacific and Canada Pension Plan Investment Board are tasked with finding tenants for around 80% of the 1 million-square-foot 1455 Market St.

J.D. Lumpkin, Cushman & Wakefield’s executive managing director, is a leasing broker for the building. He said two of Mid-Market’s biggest draws for office tenants are still there: an abundance of public transit, which is now augmented by the new Bus Rapid Transit system on Van Ness Avenue, and office rents that are still roughly 20% to 30% cheaper than downtown.

“The neighborhood’s come a long way,” Lumpkin said.

Lumpkin credits Mid-Market’s proximity to the city’s more residential neighborhoods like Hayes Valley, the Mission and the Castro, making it a convenient place for workers who want an office but don’t want to venture too deep into downtown.

“It’s the gateway to the neighborhoods. It’s right there for you,” Lumpkin said. “Tenants that we’ve had success with, they like it because it’s not the central business district. You’ve got access to where employees live.”

“I think remote work is here to stay for sure,” Lumpkin said. But he added that he believes as longtime workplace policies are figured out, trends will begin to shift in favor of more time in the office.

For now, Twitter has shown no signs of backtracking on its permanent remote-work policy. However, Musk is a foe of the practice and recently mandated office workers come back full-timeat his other companies, Tesla and SpaceX.He also fought to keep Tesla’s Fremont factory open in 2020 in defiance of health orders.

Musk’s agreement to purchase Twitter led to speculation that he would bring workers back to Mid-Market — or move its headquarters to Texas, as he did with Tesla. But if Musk and Twitter go to court, the company’s remote work policies are unlikely to change for months or even years as the case is heard.

The lack of workers and other shoppers has been agut punch to the Market,the grocery store and food hall on the ground floor of the Twitter building. Sales have fallen as much as 90% from pre-pandemic levels.

Owner Chris Foley said the business is now closed on weekends and the meat department shuttered after a Whole Foods opened two blocks away earlier this year and offered lower prices. A plan toexpand into an adjacent spaceis on hold, though two new tenants have opened during the pandemic:popular ramen shop Mensho Tokyoexpanded the food hall and Chinese-themed bar Northern Ducks replaced Dirty Water, which closed in 2018.

For now, Foley, who moved to the Bay Area before the 1989 earthquake, is hanging on.

“我是她e a long time. San Francisco will recover,” he said. “I’m a believer.”

Mid-Market does have an asset that was absent in the early 2010s:a wave of new housing projectsthat include around 1,200 apartments and condos on Market Street between Fifth and Eighth streets. They should help boost foot traffic, according to Mayor London Breed’s office.

Two blocks east of Twitter, the massive 1,900-unit Trinity Place had been in the works since 2003 andrecently completedits final building that includes the Whole Foods that is competing with the Market. Swedish furniture giant Ikea recentlystarted constructionon a store at 945 Market St., previously a mall project that has been empty since it was completed in 2016.

Randy Shaw, longtime executive director of the nonprofit Tenderloin Housing Clinic, was a strong supporter of the 2011 tax breaks and believes the neighborhood was on the cusp of a positive era until the pandemic hit.

“Everything would’ve worked out if it hadn’t been for COVID. The timing was just disastrous,” he said. “Mid-Market was a long-troubled neighborhood. A strategy was in place to turn it around.”

Now, Shaw said he believes most tech workers won’t return. He is more confident about the future of the Tenderloin, which relies on a residential tenant base, than Mid-Market.

Shaw said he believes the city can also do something to directly benefit the neighborhood: bring government workers back full-time.

Mayor Breed’s office said that around two-thirds of city workers, or 22,000 people, continue to work in-person full time. Recently approved labor contracts require at least three days a week in the office beginning Sept. 6 for all employees, up from the two-day requirement set last November.

“The City is committed to providing workers greater flexibility in their schedules while also keeping the Civic Center and Mid-Market areas activated,” the mayor’s office said.

Breed’s budget proposal includes $25.4 million over the next two years to fund Mid-Market and Tenderloin street ambassadors who guide visitors in the area. Breed is also proposing an $8 million Economic Core Recovery Fund to support events, public space improvements, the arts and pop-up businesses in empty storefronts in Mid-Market and downtown.

“If we want to continue to make progress on homelessness, have police officers and firefighters responding to calls in all neighborhoods, provide vital support for children and families, and all the other priorities we all care about, we need a thriving Economic Core,” shewrote in a recent post on Medium.“There are no easy solutions here.”

Roland Li is a San Francisco Chronicle staff writer. Email:roland.li@sfchronicle.comTwitter:@rolandlisf