Retail Exodus Grows in Downtown San Francisco

Nordstrom has become the latest retailer to close its stores in downtown San Francisco, a growing exodus of brands from the hollowed-out city center, which is suffering from a dearth of office workers and an increase in crime.

Nordstrom will vacate more than 300K SF at the Westfield San Francisco Centre on Market Street and it will close a nearby Nordstrom Rack outlet.

“The dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully,” Jamie Nordstrom, chief stores officer, said in a letter to employees Tuesday.

Since the beginning of the year, retailers including Office Depot and Anthropologie have announced they are closing their Market Street stores. A Whole Foods store in the neighborhood said it would vacate the space because of safety concerns.

“The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco,” Unibail-Rodamco-Westfield, the mall owner, said in a statement.

“A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area,” the statement said.

Meanwhile, city officials are promoting creative ways to address the emptiness of the downtown, which is struggling to shake a “ghost town” label since tech employers embraced remote work and began hollowing out office buildings.

With more than 40 vacant storefronts, the city has launched a non-profit program called Vacant to Vibrant—a series of hip new “pop-up” stores the city is hoping will make downtown the “it” spot to hang out, according to a report from KRON4, a local TV affiliate.

The program, which will be managed by the San Francisco Office of Economic and Workforce Development with a budget of $710K, is part of Mayor London Breed’s downtown recovery plan.

Ideas for pop-up initiatives that will get people to hang out in San Francisco can be pitched on the economic development office’s website. The portal, which opened last month, already has received 53 applicants, the TV outlet reported, including a Singaporean fast-food outlet, a mocha café and a sake and wine bar.

Pop-up grants range will range from $3,000 to $8,000; the Vacant to Vibrant program says its team will “take care of logistics.” The city says it will choose the winning bids in June for what will be the first of three phases that will feature 10 to 15 pop-ups opening in each phase.

Unfortunately for San Francisco, whatever street traffic the pop-ups can generate is unlikely to include office workers pouring out of buildings at Happy Hour on a hybrid summer evening. Nearly a third of the offices in the Golden Gate City are empty, a vacancy rate approaching 30% in Q1 2023.