High-end department stores Nordstrom and Saks Off Fifth became the latest retail stores to vacate San Francisco on Tuesday, with the 3 large locations representing over 500,000 square feet of retail space expected to be completely vacated by the early fall.
For several years, large chains and small businesses alike have been leaving San Francisco, either closing permanently or relocating operations outside the city. In the case of small businesses, some have left the area entirely, moving out of state or to other areas in the state. For the last few years, for example, Walgreens has closed more and more stores in the city due to the massive amount of crime within its stores. Higher-end stores have also cited break-ins and crime as major reasons for leaving. And just within the last two months, all Amazon Go stores, Anthropologie, several high-end Union square stores, and the flagship Whole Foods store have all announced that their doors will be closing, along with multiple non-chain stores throughout the city.
While crime has been cited as the main reason for many going, high rent costs, a lack of customers coming in due to the concurrent office exodus from the city, the homeless crisis keeping many away from parts of the city, and the overall decline of retail have all played a factor in the high number of businesses leaving. On Tuesday, all of those factors caused both Nordstrom and Saks Off Fifth to leave as well.
Nordstrom will be closing both of their San Francisco locations, one in Westfield Mall and the other, a Nordstrom Rack, in the downtown area. Both will wait until their leases are up, with the downtown Nordstrom rack closing on July 1st and the mall location on August 31st. While the closures could be looked into as part of the overall decline of retail, the company proved this to be false by announcing 5 new locations to be opened up across the state, including 4 ringing the Bay Area.
They also specifically noted the worsening conditions for the stores in the city, stating in an e-mail that “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.”
The Westfield mall also released a statement about the closure, noting in a statement that “the planned closure underscores the deteriorating situation in Downtown San Francisco. 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. We have expressed serious concerns to city leaders for many years and urged the city to find solutions to the key issues and lack of enforcement against rampant criminal activity.”
Saks, meanwhile, announced that their Saks Off 5th location on Market Street is due to close this fall after more than 8 years in the city. The Saks off 5th, located right by the Nordstrom Rack location, will be the only location closing in the area, with other Saks Off 5th locations in Petaluma, Milpitas, and Livermore remaining open, and the Saks 5th Avenue location in San Francisco also remaining open for now.
City officials were disappointed by the decision of the retailers, noting that they were increasing police presence at the locations where the stores are leaving and that other public safety measures had been enacted in recent years. However, the multitude of problems proved to be too much for the companies in the end.
“The City worked with Westfield to approve an office allocation and plan to reduce Nordstrom’s square footage and bring in additional office uses to the property,” said the Mayor’s office. “This plan made it through the Planning Commission but no further steps were taken on this plan,” said the spokesperson. “Westfield then began speaking about other options for redevelopment. The City has been eager to get a concrete plan from them that we could explore, however, they never brought us anything for review.”
However, security and safety experts have pointed out that not enough is still being done, with more businesses likely to leave soon as more leases come up for renewal.
“More big name stores left. This isn’t really a surprise anymore,” explained Bay Area security consultant and former policeman Frank Ma to the Globe on Tuesday. “The city just keeps refusing to do what is needed to be done. Get more officers, increase the number of prosecutions, and give economic incentives for these businesses to stay. Right now they are just not getting any.”
“It’s getting to the point where I am giving security consults to the same locations now. One place I did last week I had also swept through just before COVID in 2020 and then again in 2018. Another place I did at the exact same time in 2022 and 2021. All for new businesses coming in. That’s the turnaround in some places now. And those are the lucky ones, as many retail spaces are empty.”
Office space vacancy alone is around 30% across the city.
“This isn’t normal, especially for a city like San Francisco. But the city did it to them, so now everyone is getting out.”
More stores are expected to leave throughout the year as store leases begin to end for many.
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