The Symbol of Innovation Turned 'Gotham City'... San Francisco's 'Great Escape' Accelerates

Nordstrom and Other Retailers Decide to Withdraw One After Another
Silicon Valley Startups Also Moving to Seattle and Austin
Post-Pandemic Urban Hollowing... Concerns Over a Path to Decline

"The streets are left with only homeless people due to the pandemic. Companies are busy trying to leave as soon as possible."

An 'exodus' pattern continues in San Francisco, California, which has long been a sanctuary for innovative American companies. Not only startups in the Silicon Valley area of the Southwest but also retail companies located in the heart of the city at Union Square are withdrawing one after another.

'City landlord' Nordstrom withdraws after 35 years

A citizen collapsed on the street. [Image source=Captured from Gavin Newsom, Governor of California's Twitter]

According to CNN Business on the 28th (local time), the famous American department store chain Nordstrom withdrew from downtown San Francisco as of the 27th. Nordstrom, which sparked a wave of downtown redevelopment in the 1980s and was called "the landlord of San Francisco," closed its doors after 35 years.

Earlier, Nordstrom announced its withdrawal plan in May, stating, "The dynamics of the downtown San Francisco market have dramatically changed over the past few years," and "This is affecting the number of customers visiting the store and the ability to operate successfully."

According to market research firm CoStar, about 40 stores have closed in Union Square alone since the COVID-19 pandemic began in 2020. These include ▲H&M, Gap (2020) ▲Uniqlo, Disney, and two others (2021) ▲Abercrombie & Fitch and two others (2022).

This year, the large supermarket Whole Foods closed its operations just one year after opening, and the shopping mall Westfield gave up the operating rights of the San Francisco Centre in June. Westfield stated, "Due to the deteriorating operating environment in downtown San Francisco, sales and occupancy rates are declining, and foot traffic is decreasing."

Retail companies leaving downtown San Francisco have pointed to the environment changed by the COVID-19 pandemic. It is analyzed that urban hollowing has progressed as remote work spread among Silicon Valley tech companies such as Salesforce, Uber, and Twitter. In the first year of the pandemic, San Francisco's population decreased by 6.3%, the highest among U.S. cities.

Post-pandemic urban hollowing... 'Gotham City' stigma due to drug crimes

Nordstrom department store in downtown San Francisco, which closed after 35 years on the 27th.
[Image source=EPA Yonhap News]

The empty city attracted homeless people. After the pandemic, those who became homeless due to income disruption and homeless people from nearby areas gathered, leading to security instability. In some areas like Tenderloin, people intoxicated on drugs were observed walking like zombies, leading to stories that it had become "Gotham City."

Despite the security instability, California imposes some of the highest state taxes in the U.S., with an 8.84% corporate tax and a 13.3% income tax. Silicon Valley tech companies are also moving to places like Seattle, Miami, and Austin.

There are concerns that the city could collapse as companies and tourists avoid it. This is because Detroit, which was the center of the U.S. automobile industry until the 1940s, later followed a path of decline due to rapid population decrease and economic downturn.

However, contrary to this trend, the Swedish furniture company IKEA recently opened a three-story store on Market Street in San Francisco. San Francisco officials said, "We hope IKEA will attract shoppers downtown and support other businesses."