How dour must be the outlook in a city if the owners of two major hotels are simply walking away from their mortgage, handing the keys to the lender, Morgan Stanley?

That’s exactly what just happened in San Francisco. The CEO of Park Hotels & Resorts stated on June 5, “It is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market.”

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"Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges, both old and new: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand."

Here are the shocking numbers: In 2016, these hotels were appraised at more than $1.5 billion. Their current debt is $725 million, and the owners think the hotels aren’t worth that much. That is, the hotels lost half their value in seven years.

We are witnessing the utter collapse of San Francisco. The New York Times tried to soften this incident as a story of “a city hit hard by pandemic-related changes.”

That’s not false. The plague of crime, homelessness, and general disorder that has taken over San Francisco has been accelerated by the pandemic lockdowns. Shuttering downtown stores and hotels left the streets in the hands of the criminal element. Closing schools and banning Little League pushed hundreds of bored and shiftless youths toward shoplifting and carjacking.

The city’s tolerance of homeless encampments and public defecation and intolerance of new housing predated the pandemic, of course. A left-wing prosecutor created a crime-friendly culture.

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All of these problems were self-reinforcing. More crime causes hotels to shut down, which leads to less tourist traffic, which leads to less legitimate business, which leads to emptier streets, which leads to more crime.

It’s a doom loop. San Francisco isn’t the only U.S. city to experience this collapse. Chicago and Portland are living through this as well. It’s enough to make anyone want to walk away — even the owner of 2,900 hotel rooms in formerly prime real estate.