By Ann Saphir

OAKLAND (Calif.) – Two years ago, the COVID-19 pandemic had sent the U.S. economy and the world economies into the worst recession in many decades. Last month Chris and Amy Hillyard renewed their lease at Farley’s East, their Oakland coffee shop.

After achieving record sales in February 2020, the location was closed by the authorities.

Chris Hillyard explained that even though most office workers have moved on two years ago, the cafe is still not able to provide enough income to support their monthly expenses.

Hillyard said this despite the fact that their landlord had agreed to lower rent for the new term of five years. Hillyard doesn’t seem to be deterred.

“Two bad years isn’t going to kill us off,” he said. “We’ll get through it…We are betting on that happening.”

This is a sound bet. It’s a good bet. COVID claims have fallen, school rules have been relaxed, and local businesses are returning workers to their office. CBRE Econometric Advisors figures show that the U.S. vacancy rate fell last quarter for the first-time since mid-2018.

We still have a ways to go. CBRE economists expect that the vacancy rate will not fall to 15% over 30 years, as it was in 2026.

Back-to-work barstometer Kastle System measured keycard swipes, building access data and other information. It found that only 40% of the pre-pandemic level was reached in 10 large cities. The San Francisco metropolitan area recorded around 42%.

30%.

Phil Ryan of JLL’s U.S. Office Research said, “This is about jump substantially,” citing announcements made by financial and large tech tenants that employees would be back in the office within half an hour starting in late March. “Over-the short-term foot traffic is expected to increase.”

HIGH INFLATION AND SCARCE LABOR

Hillyard’s optimism, however, is tempered by the fact that inflation has already reached its highest level in forty years and may rise more.

The February consumer prices rose 7.9% year-over-year. They are expected to rise even more this month, as Russia’s invasion in Ukraine increases the cost of gasoline, wheat, and other commodities.

The Hillyards feel the pinch. Each week is marked by a different notice from one of the suppliers: A price rise of $11 from the bakery which supplies Hillyard pastries. The half gallon of milk will now be $2.68 rather than $2.25. There has also been a 25% price increase for coffee beans.

Farley’s has raised its prices by 10% last month, the first since the beginning of the pandemic. Hillyard claims that it was not something customers will soon be able to do again, even though they seemed to enjoy it.

Hillyard declared, “Prices must not go up or the whole thing will fall.”

He said that he cannot hire enough people despite being paid a higher salary. According to Bureau of Labor Statistics, the Oakland area workforce (the pool of people who are looking for work or have jobs) has been improving but is still 33,000 short of the pre-crisis level of January. This is a 2.3% deficit from February 2020. It’s 2 percentage points higher than the national average.

There are only five workers on shifts that truly need six. He stated, “It’s difficult on the staff because it’s harder on them because they are asked for more.”

The Hillyards remain optimistic. Their second and smaller company in San Francisco’s Potrero Hill has been an immediate success. With plenty of foot traffic coming from home, and new merchandise sales such as T-shirts, bags, and coffee mugs, sales are back to their pre-pandemic levels.

The second is that two new airports have been opened. One in San Francisco where international travel has not yet picked up, while the other one was inaugurated last month at Oakland Airport, which is where Southwest Airline is growing its domestic business.

Yes, gas prices rose by about $1 per gallon after Russia invaded. Hillyard said that he will likely be paying fuel surcharges as trucks attempt to recover losses.

However, he stated that after two years of hard times, he “just can’t worry so much about anything.”

“We are simply looking forward to selling more coffee”