Monday, March 24, 2025
San Francisco faces a retail crisis with rising store closures, but new development projects and revitalization plans offer hope for the city’s economic recovery and growth.
The closure of Bloomingdale’s in San Francisco, which will lead to the layoff of 164 employees, follows a series of store closures by Macy’s Group, which announced in January 2025 its plan to shut down more than 150 stores nationwide by 2027. However, other Bloomingdale’s locations in California, such as those in Palo Alto and Santa Clara, remain open with no additional closures reported.
In 2023, the San Francisco Centre, previously a Westfield mall, saw several major retailers shut their doors. Nordstrom closed its five-story department store, marking the end of its 35-year presence in the city. Other brands, including Hollister (a subsidiary of Abercrombie & Fitch), J.Crew, and American Eagle, followed suit. The trend continued in spring 2024 with the closure of The North Face store in Union Square, and the Zara store at 250 Post Street is also set to close soon. There are even rumors about the potential closure of Saks Fifth Avenue, which has already transitioned to an appointment-only model at its Union Square location and made employee layoffs.
Several factors are being cited for the closures, including the surge in fentanyl-related incidents since 2020, with over 800 fatalities in 2023, which have contributed to declining business conditions in parts of the city. Nordstrom’s leadership cited “significant shifts in the Downtown market” as the primary factor behind the store’s closure.
San Francisco has also been struggling with a record-high office vacancy rate of 37.3% at the end of 2024, a direct result of the pandemic and the shift to remote work. This situation worsened with the relocation of Elon Musk’s company, X, from the city to the Palo Alto and San José area. As a result, tourism in the city has been significantly impacted. While San Francisco welcomed 26.21 million visitors in 2019, the forecast for 2024 was just 23.01 million. However, predictions for 2025 are slightly more optimistic, with a projected 23.55 million visitors.
This downturn is also affecting the hotel industry. The Hyatt Regency Hotel in Downtown San Francisco, a 17-story property with 686 rooms, was handed over to Blackstone Mortgage Trust at the end of 2024 due to a $290 million debt. The Proper Hotel, located at 1100 Market Street, has also defaulted on a $28 million loan and may face foreclosure or ownership changes.
Additionally, in 2023, Park Hotels walked away from the Hilton San Francisco Union Square and Parc 55 San Francisco hotels, both situated in the Union Square area, though they may be taken over in the coming weeks.
Despite these challenges, San Francisco Mayor Daniel Lurie remains hopeful about the revitalization of Downtown. However, retailers in the area remain cautious, with some changes already underway. On May 15, the former BCBG Max Azria location, which has been closed since 2017, will reopen as the second Nintendo store in the U.S., following New York.
In another positive development, the Jackson Square neighborhood, known for its high-end stores and art galleries, has seen Ralph Lauren reopen its boutique at 441 Jackson Street. This new store, which features both men’s and women’s Polo Ralph Lauren and Double RL collections, as well as vintage apparel, joins other prestigious brands like Isabel Marant, Anine Bing, Paul Smith, Thom Browne, and Zimmermann in the area.
