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May 12, 2023 : San Francisco’s downtown retail community faces a challenging situation as Nordstrom and Coco Republic join the growing list of businesses leaving the area. While city authorities are attempting to implement measures to expedite planning, encourage pop-up shops, convert retail spaces into offices, and enhance policing, several major retailers have already closed their doors. The pandemic-induced shift to remote work has left offices vacant, resulting in decreased real estate values, reduced tax revenue for City Hall, and strained public service budgets. This downward spiral has prompted more residents and businesses to depart, further shrinking the tax base.
Mayor London Breed denies that the city is in a doom loop, but over two dozen retailers have left during and after the pandemic. Nordstrom recently closed its flagship store at the Westfield Mall, and Australian furniture retailer Coco Republic abruptly announced its store closure near Union Square. Safety concerns and a significant decline in foot traffic were cited as reasons for their closures. The west side of Stockton Street has been particularly affected, with T-Mobile vacating its showroom earlier this year. These departures have left the city and added to the growing list of major retailers, including Amazon, CVS, Walgreens, Uniqlo, and H&M.
The Union Square shopping district, San Francisco’s premier shopping area, has seen around a quarter of its storefronts vacant, with public safety, theft, and homelessness cited as reasons for closures. The temporary closure of the city’s largest Whole Foods in April further highlighted the issues, with rampant theft and a fatal drug overdose occurring within the store. City officials have pledged to streamline permits for more flexibility in retail space usage, including office uses on upper retail floors. Vacant to Vibrant program has been launched to attract pop-up businesses to fill empty storefronts.
Despite these efforts, the city faces challenges in revitalizing the retail sector. High construction costs, labour shortages, and a historic drop in workspace requirements make conversions and renovations complicated and costly. While lower rents could potentially attract businesses that were previously priced out, Westfield, the operator of the flagship Nordstrom store, blamed an inadequate response to crime for the closures, pointing to “unsafe conditions” and a “lack of enforcement against rampant criminal activity.”
Remaining retailers in San Francisco, including headquarters of major brands like Levi’s and Gap, need convincing that the city still offers a favourable business environment. The situation calls for comprehensive efforts to address safety concerns, revitalize the retail sector, and restore confidence among businesses and shoppers.
