San francisco is finally waking from its living nightmare

Melissa Lawford US Economics Correspondent 25 May 2025 6:00am BST Aaron started coming to San Francisco’s Tenderloin neighbourhood three years ago to buy heroin. “I didn’t know where else to

go to get drugs. San Francisco is the place where people historically do drugs. So I came here and I just started shoulder-tapping random people.” He arrived at the height of San

Francisco’s so-called doom-loop, as homelessness, addiction and shoplifting rocketed in the wake of the pandemic. Thousands of businesses abandoned the city, turning parts of downtown into

lawless, open-air drug markets in one of the richest cities in the world. Aaron found heroin but soon switched to fentanyl. “I ran out of money, and it’s cheaper.” But at lunchtime last

Tuesday in San Francisco’s UN Plaza in the Civic Center neighbourhood, next to the Tenderloin, the 33-year-old is not shooting up, but playing ping-pong. The newly installed tables sit next

to a collection of chess boards, occupied by three pairs of players concentrating intently in the sun. “There used to be a whole homeless tent city right here,” says Aaron. The drug addicts

have not left. “Come back here at 2am and hundreds of people will be spiralled out half-dead,” he says. But the contrast between what this area looked like when Aaron arrived and how it

looks now is stark. It is one of many signs that San Francisco is at the beginning of a turnaround. The city’s tent count has dropped to the lowest level since records began in 2019, crime

has plunged to a 23-year low and new office leasing has hit its highest level in six years. Citizen activist groups backed by high-profile billionaires have led an uprising against extremely

liberal policy-making, overhauling the city’s political system by reducing far-Left dominance of the school board, the district attorney’s office and the city’s board of supervisors. New

mayor Daniel Lurie, a moderate Democrat who took office in January and is considered wholly pro-business, now has much more licence to press ahead with an agenda of reform. At the same time,

back-to-office mandates are bringing new life to the business district and Silicon Valley’s artificial intelligence (AI) boom is driving a surge of optimism in the tech sector, the

lifeblood of the city’s economy. San Francisco is in recovery. If it returns to full health, residents will hail a seismic victory for common-sense policymaking over the far-Left ideas that

bought the city to its knees. LEFT TO ROT Much of San Francisco is gorgeous and thriving. The bars in the Castro district are humming. Volleyball players serve at golden hour in Dolores Park

overlooking the skyscrapers of the business district. But the scene in the Tenderloin is dystopian. On the pavement on Leavenworth Street, a couple have their heads huddled under a soiled

blanket, holding a flame to a piece of foil at the end of a pipe. A woman sits slumped against a nearby wall, sobbing audibly. Hunched, hooded people wearing pyjama bottoms and Crocs cross

the street with jerky, unnatural steps. One man, bent nearly double, stands in the middle of the intersection staring into the middle distance, his face stretched in shock, showing the

whites of his eyes. Shopfronts are not just boarded up but locked behind metal gates with graffiti-ed plates over their windows. Many of those that are open still have bars over their

windows. For many blocks, it is difficult to walk down the street without tripping over someone. But even this is an improvement. These streets were once filled with sprawling encampments.

In back alleys, there are now parked Teslas instead of tents. And there are no glittering dustings of smashed car windscreens, which used to be such a common sight it was dubbed “San

Francisco snow”. The city has long had a problem with homelessness and drug addiction. Problems were super-charged by the arrival of fentanyl and then the pandemic. Downtown districts became

ghost towns as major employers shifted to remote working or quit the city altogether. The loss of foot traffic hammered retailers just as street homelessness surged. Retail theft and drug

dealing boomed. Some shops were looted. More businesses left. As recently as January, Walgreens announced a fresh round of 12 store closures. The post-pandemic tech slump was a further drag

on the local economy and jobs, while a slump in office leasing and commercial property values hammered the city’s tax revenues. It has proved a living nightmare for residents of a city that

has more billionaires than any other place in America. San Francisco’s problems are a case of liberal policies hitting their limit, argues Steve Hilton, a former adviser to David Cameron and

now a Republican candidate for governor of California. “It is symptomatic of everything that’s gone wrong in California.” But now San Francisco is freeing itself from the doom-loop it has

been stuck in. The number of car break-ins last year plunged by 50pc to a 22-year low, according to figures from the San Francisco police department (SFPD). The San Francisco Chronicle

reported earlier this year that auto glass repair shops had seen such enormous drops in business that they were considering making staff redundant. The overall number of reported crimes fell

by 28pc in 2024 to the lowest level in more than two decades. So far this year, it has dropped by a further 27pc. The city’s homeless tent count fell to just 222 in March, down from 609 in

July 2023 and less than a quarter of the 2020 record of 1,108. Although the number of homeless people in San Francisco hit a record high of 8,323 last year, the number of people who were

actually sleeping on the streets fell to a six-year low. Drug overdose deaths fell by 22pc in 2024 to their lowest level since 2019. Aaron, who is not homeless because he lives with his

family, can feel the difference. Law enforcement has become much more visible and much more active in recent months, he says. He has been ticketed twice in the last few weeks, once for

selling merchandise without a permit and once for using drugs in public. Some of the changes are because of Mayor Lurie, who has introduced a new street team response programme and measures

that mean people selling commonly stolen goods without a permit or proof of purchase can get apprehended. Others are because of Lurie’s predecessor, London Breed, who was also a moderate and

initiated UN Plaza’s redevelopment. But the major seeds of change in San Francisco began in the thick of the pandemic. CITIZENS REVOLT In 2021, long-time San Francisco Bay Area resident and

former drug decriminalisation advocate Michael Shellenberger published “San Fransicko”, a damning critique of the city’s progressive policies that he said were enabling addiction. Today,

San Francisco, arguably the most liberal city in America, has hardly shifted to the Right. But it has new “rational politics” as Bill Oberndorf, founder of the multibillion-dollar investment

firm SPO Partners, has termed it. In 2020, a group of long-term city residents formed a super-political action committee (Pac) called Neighbors for a Better San Francisco. “We had problems

that had got so out of control that we needed to tackle them in a way that had not been done before,” says Oberndorf, who is the group’s chairman and who was a major Republican donor until

2016, when he registered as independent. Now, Neighbors has 1,000 paying members, each making a median annual donation of $1,000 (£740), and has raised a total of $23m in fundraising for

political causes in San Francisco. Neighbors is at the heart of a centrist movement led by citizens that has grown steadily in San Francisco and has the backing of many of the city’s richest

businessmen. Alongside Oberndorf, donors to Neighbors include start-up investor Garry Tan, who until January also sat on the board of GrowSF, another activist group that is run by former

Google engineer Sachin Agarwal. Billionaire venture capitalist Michael Moritz, meanwhile, was the chief donor behind TogetherSF, a political pressure group that has now merged with

Neighbors. Crypto billionaire Chris Larsen has given millions in grants to local retail organisations and the SFPD. Citizen activism has led three key changes in San Francisco’s political

make-up. The first came in 2022. Parents in San Francisco had become enraged by the fact that the local board of education’s approach meant that the city was particularly slow to reopen

classrooms after the pandemic. While classrooms were closed, the school board had passed a vote to rename a third of local schools because they were named after figures such as Thomas

Jefferson and George Washington who had inhibited social progress or owned slaves. There was a feeling that officials were focusing on the wrong things. Only one out of seven members of the

school board was a moderate. Alongside other groups, Neighbors helped provide funding and strategic support to parents to recall the board members that they could. Now, there are four

moderates on the board. Next, Neighbors spearheaded a campaign to recall Chesa Boudin, the district attorney and a radical Left-winger who was elected during what The New Yorker described as

“a Joan of Arc phase in American progressivism, when it seemed like the kids – Greta Thunberg, David Hogg, and Alexandria Ocasio-Cortez – could save us all”. Boudin launched programmes to

reduce the number of people in jails. When the pandemic hit, he released 40pc of the city’s inmates and wrote an op-ed in the LA Times titled “I’m keeping San Francisco safer by emptying the

jail”. Community groups raised $7.2m to campaign for Boudin to be recalled with nearly $5m coming from Neighbors. The Pac then recruited his replacement, Brooke Jenkins, who took over in

2022 with a promise that “crime is illegal again” and was re-elected in 2024. Jay Cheng, executive director of Neighbors, says: “Recalls are effectively citizens telling the establishment,

‘We’re firing you.’ That is a citizen revolt against a political establishment. “A large part of our work has been almost a complete turnover of political leadership in San Francisco.”

Finally, Neighbors lobbied to redraw the City’s Board of Supervisors, which has to approve measures proposed by the mayor. Before, one member of the 11 was a moderate. Now, there are five. 

“There were many things Mayor Breed would have liked to have done but she just couldn’t get movement on the board. It’s far easier to do that now,” says Oberndorf. WAR ON DRUGS Jenkins’

appointment in 2022 as San Francisco’s district attorney – a role that was once held by former vice-president Kamala Harris – has been hailed as a turning point in the city’s approach to

crime. “When I was sworn in, we were at a point of reckoning in San Francisco. The culture here was of lawlessness and of over-tolerance. [There was an idea that] criminal behaviour is

happening, and we should make excuses for people who do it. And I think people were at breaking point,” says Jenkins. Even so, citizens who were unhappy with the approach of Boudin felt

uncomfortable speaking out, she says. “I think we had a majority of people in the city that were fed up. Yet they were being silenced by the progressives and being made to feel like to say

you want a clean and safe street is racist, is anti-immigrant, is Republican.” Richard Nixon reflected a similar sentiment in the 1960s, when he appealed to the “silent majority” who

rejected the liberal excesses of the decade. However, radical progressives are now using this argument to silence not just those on the Right but other Democrats, says Jenkins. “The problem

is that the notion that you must be a racist if you want no crime, really means, to me, as a black woman and as a Latina woman, that you believe that everyone that looks like me must

subscribe to criminality, that we are the only people committing crime in this country, and we are not,” she says. “What I have tried to do is to say safety is something we all want.”

Jenkins took a very different approach to Boudin. Instead of treating the dealing of fentanyl as a misdemeanour, she treats it as a felony. She started asking the courts to keep people

charged with serious crimes, such as chronic offenders of retail theft, in custody while their cases were open. “I came in emphasising a tone of accountability that we were not going to be a

city that was tolerant of crime, that we were a city that had to enforce its laws and its rules,” she says. She also began working much more closely with other law enforcement agencies such

as the police, which means they have become better at providing the evidence prosecutors need to present in court. It is not just the DA’s office that has been changing. The police force

has ramped up its use of technology, acquiring licence plate reader cameras, drones and access to live surveillance footage. At the same time, a Supreme Court decision in June 2024 known as

Grants Pass opened the door for the mayor to remove tents. Now, Mayor Lurie has brought forward a more aggressive approach to public health. San Francisco’s approach to drugs has

historically been one of harm reduction – a policy approach focused on safer usage. Groups hand out clean paraphernalia to smoke fentanyl as a strategy to stop people from injecting it. For

one year in 2022, the city operated The Tenderloin Center, which supervised drug usage as part of a series of trial measures to tackle the crisis. In 2020, the Department of Health issued an

ad campaign trying to encourage drug users not to take drugs alone. A billboard with a photograph of people looking like they were having a great time at a party read: “Do it with Friends”.

But Mayor Lurie is changing tack. In April, he announced that non-profits that rely on grants will no longer be permitted to distribute harm reduction supplies in the city’s public spaces.

These supplies can still be distributed inside, but only if the organisations connect users to recovery programmes. In February, Matt Dorsey, health department supervisor, introduced the

“Recovery First Ordinance” which will direct the city to fund abstinence-based treatment. The shift reflects the fact that drugs are at the core of San Francisco’s homelessness problem. “By

the time you get to the street, if you’re not addicted to drugs, you sure as hell turn to drugs,” says Tom Wolf, at the Foundation for Drug Policy Solutions, who is a former addict himself.

The arrival of fentanyl on San Francisco’s streets turbocharged what was already a crisis. The synthetic opioid, which is up to 100 times stronger than heroin and far cheaper, became the

city’s primary drug by 2021. “All of a sudden we went from a couple of hundred overdose deaths in a year to 720,” says Wolf. In the first seven months of 2023, the SFPD seized 123kg of drugs

just in the Tenderloin District, including 80kg of fentanyl. This will be just a fraction of what was actually consumed. But at least it is now being seized. Jenkins thinks San Francisco

will be back to where it was before the pandemic within a couple of years. “From a public safety standpoint, in another year we will be in a better position. But what is going to take some

time is getting business back. This is an ecosystem.” AI-DRIVEN BOOM Improved public safety is helping to bring companies and investment back to San Francisco. So is the AI industry. “It

feels like we’re at the edge of the next boom,” says Rebecca Prozan, of sf.citi, a local tech industry body. Ted Egan, the chief economist at the City and County of San Francisco, says AI

companies are driving as much as 40pc of new office leasing. “Silicon Valley is just in the early phase of doing something new, and people are talking about AI the way they talked about the

internet 30 years ago,” says Egan. Last autumn, OpenAI finalised an agreement for a 315,000 sq ft office building, taking its total occupancy in the city up to 1m sq ft. In November,

Microsoft will bring its flagship Ignite conference to San Francisco for the first time. San Francisco’s office vacancy rate is still high but it has declined for the last two quarters in a

row after a new surge in leasing, according to CBRE. During the first three months of 2025, 2.9m sq ft of office space was leased in San Francisco, the highest quarterly total since mid

2019. Connor Kidd, the chief executive of The Swig Company, a real estate investor, says his company’s leasing activity has nearly tripled compared to a year ago. “We are clearly seeing

momentum. There has been a really noticeable shift starting in January this year.” Companies are finally calling workers back to the office. In October, Salesforce, San Francisco’s largest

employer, began requiring that many of its employees work at least four days a week in the office. “There was a big surge of energy after that and then everyone said, ‘OK, we’re going to do

it too,’” says Kidd. In February, Gap announced that it wanted its employees to return to a five-day working week in the office by September. Mayor Lurie is also driving a new sense of

optimism in the business community. “I went to an event a few weeks ago that was hosted by a large brokerage firm and when he showed up he got a standing ovation. He hadn’t even spoken yet,

but people were excited that he was there,” says Kidd. “And then after he spoke, he got another standing ovation.” In April, the mayor announced the formation of the San Francisco

Development Corporation, a private non-profit that will raise money to develop the central business district. Its board members include Meg Whitman, the former eBay chief executive. Lurie

has also launched Partnership for San Francisco, a group of chief executives who will work with City Hall on business policy as part of Lurie’s “open for business” campaign. Dan Safier, the

chief executive of the Prado Group, a real estate investor, says: “The city is definitely in the beginning of a recovery and the new Lurie administration is creating the conditions that will

encourage investment.” Events are coming back. The city will host 32 conference events this year, which will drive 700,000 hotel night bookings – nearly a 50pc jump year on year. “We turned

a corner this year,” says Anna Marie Presutti, the chief executive of the SF Travel Association.