Is there a retail exodus in San Francisco? Some say Union Sq. is ‘beating sturdy’
Union Square in San Francisco. At least 26 downtown businesses have closed since 2020, with seven more scheduled to close. (Gary Coronado/Los Angeles Times)
Is Union Square in downtown San Francisco really dying?
Nordstrom is closing its two stores in the area. Saks Off 5th goes. T-Mobile has already closed its two-story flagship store.
Why are these retailers at or near Union Square saying goodbye to a well-known tourist destination and the heart of the city’s shopping core? The exodus of these companies has worried some business leaders and economists alike.
A decline in consumer spending, supply chain disruptions, high operational costs and public safety have caused San Francisco’s overall retail vacancy rate to rise to 6% in the first quarter of 2023 — up from 5.2% a year earlier and the highest Been in town since 2006, according to Cushman and Wakefield, a commercial real estate services company.
Union Square’s overall vacancy rate rose to 15.5% in the first quarter of 2023, compared to 14.2% in the last quarter of 2022.
“It’s a very serious problem for the entire city, let alone downtown,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute.
But Mayor London Breed and other San Franciscans have resisted the narrative that Union Square is doomed in recent media coverage.
“For the people who don’t walk the streets of San Francisco, who don’t live in San Francisco but want to write and comment on San Francisco, I urge you to come to this city and see how it feels. ‘ Breed said during a press conference on May 16. “I urge you to shop at the stores you complain about and have probably never set foot in.”
Breed stressed that the media doesn’t report on stores like Banana Republic and Ikea that have moved or plan to move to Union Square.
At least 26 stores in downtown San Francisco have closed since 2020, with seven more scheduled to close.
This month, Nordstrom announced it would be closing its two stores on Fifth Street and Market Street, becoming the youngest retailer to leave Union Square in recent years.
The story goes on
“The dynamics of the downtown San Francisco market have changed dramatically over the past few years, impacting the flow of customers into our stores and our ability to operate successfully,” said Jamie Nordstrom, the chief stores officer, in a Explanation.
Saks Off 5th on Market Street is also closing its doors, attributing the decision to “store performance and other factors” in a statement.
As for T-Mobile’s recent Stockton Street closure, a spokesman said it was part of the company’s “nationwide retail strategy to better serve customers.”
Despite those companies moving, a few weeks ago Breed held a press conference with District Manager Aaron Peskin to announce a $6 million investment in the three blocks of Powell Street near Union Square where H&M, Gap and Uniqlo have recently closed their doors years.
While Marisa Rodriguez, the CEO of the Union Square Alliance, acknowledged that some stores have certainly left Union Square during and after the pandemic, she emphasized that luxury retailers in particular have expanded, opened or moved to the area.
“The heart of the square is beating strongly – it’s alive,” she said. “There have certainly been challenges post-pandemic that many major cities have faced. We try to position ourselves to do justice to the moment and turn where we can.”
Saint Laurent, Chanel and Van Cleef & Arpels have all moved to Union Square, while Pandora opened its doors there last year.
“When we switch off, we take it off pretty hard,” Rodriguez said. “Union Square is a visitor destination. We will see more closures than a more traditional neighborhood where people can move and shop where they live. A lot of these closures are because we couldn’t get through this shutdown.”
According to Wade Rose, president of Advance SF, a company representative, storefronts in the shopping district have become vacant in recent years due to the increase in internet shopping and the reduction in foot traffic as a result of the pandemic.
“This is an example of the pressure that urban retail is feeling because of people’s buying habits,” Rose said. “San Francisco is very committed and looking into this issue. About 300,000 fewer people live in downtown San Francisco than in 2019.”
The city’s property crime and homelessness crisis have also deterred foot traffic, Rose said.
According to the California Department of Justice’s Criminal Justice Statistics Center, San Francisco has the highest property crime rate in the state, rising 16.9% in 2021.
The Bay Area has the highest rate of property crime in the state, with a rate of 2,718 per 100,000 people.
According to the San Francisco Police Department, reported cases of commercial burglaries in San Francisco have actually decreased. There were 1,107 incidents in 2020, compared to 945 in 2021 and 735 in 2022.
Rose described San Francisco’s Stonestown Mall as a shopping district that adapts to the needs of the population. The mall, which was once very traditional and which included a Macy’s, was going through hard times and needed to be reinvented, he said. There is now a Trader Joe’s, a sports cellar and a Target.
“It’s thriving because it meets the needs of the neighborhood and has the kind of metamorphosis that needs to happen in the downtown retail district,” he said. “It’s not just Union Square that’s under pressure because of these issues.”
Union Square and other shopping districts need to be diversified and offer diverse shopping and living experiences to attract consumers.
“The bottom line is that San Francisco’s urban core needs to become a much more experientially and physically diverse place than it is through the recovery from the Great Recession,” said Rose. “That means there should be a 24/7 city, there should be more cultural offerings, and there should be diverse types of retail and businesses.”
This story originally appeared in the Los Angeles Times.