Saving San Francisco’s Downtown Retail

San Francisco’s retail is dying. Our downtown in particular is in dire shape and businesses are on a short fuse to eventually close.  Popular retailers like Barneys, The Gap, Walgreens, Starbucks, Peet’s Coffee – they have all closed or will be closed soon. This is not a joke, it’s real. The question is why?  Yes, the pandemic is a primary factor but it’s not the only factor. Our city officials either do not know how to respond or are just clueless. 

The Real Problem

Mayor London Breed called upon Union Square merchants several months ago to address this decline in her Recovery Plan. Her solution was to get merchants to ask building owners and their brokers to lower the costs of rent and fees in order to attract new tenants. This “solution” suggests our Mayor has a complete misunderstanding of the true challenges that retailers are facing today. 

Building owners and brokers have already cut deals that involve zero rent.  Instead, several building owners are making offers to take a percentage of a tenant’s gross revenue so that rent will be relative to the business’ income. However, even with no fixed rent, tenants are not signing leases and the problems continue to mount. So what is the problem? In addition to San Francisco’s dirty streets and homelessness, the biggest problem that is killing our retail the most is theft. 

One of the biggest mistakes made a few years ago was when the district attorney, Chesa Boudin, announced a new policy that stated no one will be charged for thefts valued under $950.  As a surprise to no one, stores are now telling their security staff to stand down when it comes to in store thefts. These local policies and attitudes have spotlighted San Francisco as the perfect place for organized retail crime.

The other day I saw four teenage girls running out the door of Bloomindale’s downtown, each with multiple women’s handbags.  I was going to step in front of them to slow them down when I saw the security guard was not chasing after them.  Even at wholesale, that one theft probably cost Bloomingdale’s $5,000 in losses. Multiply that throughout the city and you begin to quickly see why retailers have no choice but to close. 

Target recently announced they would be adjusting store hours due to increased theft and safety concerns. Mayor Breed responded saying Target was closing because of lack of help.  

Until the real problem can be addressed, our city will continue to lose its core downtown retail.  This will have a serious domino effect, impacting the success of securing both office and residential tenants in the downtown area.  Blight has already begun as we see homeless camping out in more doorways of these now vacant stores. 

The Solution

With all of the problems Chicago has, it does not have a retail problem. The city streets are clean, there’s fewer homeless, and planters with flowers line the city streets. So how do we mirror Chicago?

City officials need to understand the importance of its tourists and residents that shop in their downtown. They need to realize that strong retail supports both office and residential tenants above. They also need to understand that good business and good tenants ultimately generate tax dollars.  

During my last visit to Chicago, I spoke to a police officer standing watch on a street corner and told him how impressed I was with the safety of their city. It was 10:00 pm at the time. He indicated that the store across the street had a problem the day before, but they took care of it. Other than that, their mission is to keep people like myself (outside money) safe. He then informed me that he was an off-duty police officer.  He indicated that several officers volunteer their off hours to keep their city safe. 

This is the type of culture we should emulate. Between our city officials and our police department — this simply does not exist in San Francisco.  

We need to change this culture first and drive home that our tourists, our residents and our retailers and their safety is our number one priority. Once we start with that, we can work on a plan to create public safety to stop crime and provide a welcome mat to new retailers and their customers. 

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