Image of man thinking in San Francisco
Photo: iStock

In what would follow the recent exits of Whole Foods, Old Navy, and numerous others from downtown San Francisco, high-end retailer Gump warned that it may soon close its sole location after 166 years due to deteriorating local conditions.

“The ramifications of Covid policies advising people to abandon their offices are only beginning to be understood. Equally devastating have been a litany of destructive San Francisco strategies, including allowing the homeless to occupy our sidewalks, to openly distribute and use illegal drugs, to harass the public and to defile the city’s streets,” wrote John Chachas, Gump’s owner, in an open letter to the city and state officials in a full-page ad in the San Francisco Chronicle.

Chachas, who acquired Gump’s out of bankruptcy proceedings in 2018, argued that current conditions make San Francisco “unlivable for its residents, unsafe for our employees, and unwelcoming to visitors from around the world.”

Several retail exits, including mall owner Westfield relinquishing San Francisco Centre to its lender and Nordstrom shutting down both of its San Francisco stores, echoed similar complaints.

A CNN article said big cities across America face similar challenges. While crime and public safety concerns are often cited as the primary causes of store closures, other factors play a role as well, including too many stores, remote work, online shopping, high rent prices, and labor shortages.

A report from JLL said central business districts need to “shift away from being primarily places of work towards becoming mixed-use destinations that capitalize on being at the heart of transport networks with access to a wide range of amenities, as well as educational and cultural institutions.”

A recent study from the University of Toronto ranked San Francisco last among 62 North American downtowns in their return to pre-pandemic activity, regaining only 31% of 2019 traffic. San Francisco’s lackluster recovery was attributed to its heavy reliance on international tourism and its increasingly remote tech workforce.

Nonetheless, the researchers likewise concluded that business districts would have to take advantage of “their density, connectivity with transit systems and location” to reinvent themselves.

Richard Florida, a specialist in city planning at the University of Toronto, told the Associated Press, “They’re no longer central business districts. They’re centers of innovation, of entertainment, of recreation. The faster places realize that, the better.”

BrainTrust

“This is hardly a San Francisco-only problem, it appears to be endemic and growing concern for communities across North America and beyond. “

Mark Ryski

Founder, CEO & Author, HeadCount Corporation


“Crime and Covid provided the perfect storm. And the ‘new normal’ that life is bouncing back to is not suiting San Francisco well at all. It didn’t need to get this bad.”

Jeff Sward

Founding Partner, Merchandising Metrics


“This is the new reality throughout today’s U.S. Look to town centers as being the new model for in-person shopping.”

Ken Morris

Managing Partner Cambridge Retail Advisors

Discussion Questions

DISCUSSION QUESTIONS: How may prominent downtowns and business districts need to be reimagined to regain retail vitality? Is San Francisco a unique situation or do many big cities face similar challenges?

Poll

Do you see more of a near-term or long-term post-pandemic recovery for retailers in central business districts?

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14 responses to “Gump’s Threatened San Francisco Exit Highlights Downtown Struggles”

  1. Neil Saunders Avatar
    Neil Saunders

    The owner of Gump’s once ran as a Republican candidate, so he has a political as well as commercial perspective. However, his remarks need to be assessed on their merits. And what he says is eminently reasonable. Like other cities, San Francisco has struggled to rebuild foot traffic as people visit offices less. There is a homelessness problem which remains unresolved. And while some crimes have fallen, property crime and robbery are both up – not helped by California’s misguided policies on crime stemming from Proposition 47. Elected officials seem to have very few answers and very little imagination. Other retailers, including Whole Foods and Anthropologie, flagged similar problems, and have already voted with their feet and shut up shop. Gump’s following them would be yet another loss for San Fran.

  2. Mark Ryski Avatar
    Mark Ryski

    Downtown business districts across North America were profoundly and systemically impacted by the work-from-home movement created by the pandemic. And despite effort/pressure on the part of employers to get workers to return, many are simply refusing to come back to the office, and some are even prepared to leave their jobs if forced to return. Fewer workers in the downtown/business district creates a vacuum that is getting filled by people that simply do not have a place to live, and this helps create conditions for crime to occur. This is hardly a San Francisco-only problem, it appears to be endemic and growing concern for communities across North America and beyond. 

  3. Jeff Sward Avatar
    Jeff Sward

    I’m betting that San Francisco is not in the least alone in their plight. How many other downtown business districts are approaching the precipice that San Francisco has now tumbled over? San Francisco may have fallen over the cliff first, but other downtowns are surely approaching similar circumstances. Crime and Covid provided the perfect storm. And the ‘new normal’ that life is bouncing back to is not suiting San Francisco well at all. It didn’t need to get this bad. And to a degree, it’s fixable. When do mistakes get acknowledged? Nothing changes until something changes.

  4. Ken Morris Avatar
    Ken Morris

    Will the last retailers to leave San Francisco please turn off the lights. While SF is the extreme example of a post-pandemic city in a sorry state, with a vacancy rate of 36%, this is the new reality throughout today’s U.S. Look to town centers as being the new model for in-person shopping. Their mixed-use approach and relative distance from homelessness and gangs combine with giving remote workers a shorter drive to shop, eat, and maybe watch a movie.

    And let’s not forget the massive crime factor that has driven out many of San Francisco’s major retailers. Retail theft has become endemic and takes many forms, and there are lots of ways to combat it. But even video surveillance and RFID usage have a hard time keeping up with organized crime.

  5. Zel Bianco Avatar
    Zel Bianco

    I’m afraid that NYC is not far behind unless the mayor starts addressing the homeless and migrant issues that have made the city even more chaotic than usual. Add the electric scooters, bikes and motorcycles whose riders have no regard for the obeying traffic laws and you have a situation that is ripe for smash and grab incidents at retailers. The CEO of Dollar Tree and Family Dollar indicated that they are having a terrible time of controlling shrink at their stores, so this is happening everywhere.

  6. Lucille DeHart Avatar
    Lucille DeHart

    Theft is a real profit factor for retailers. New laws allowing for $900 smash and grabs with no accountability are fueling a wave of crime, especially in urban areas. This, coupled with homelessness,are driving businesses to make hard decisions–protect their bottom lines and employees/customers and move to safer locations or stay and build in replenishment and repair into the cost of operations.

  7. Bob Phibbs Avatar
    Bob Phibbs

    Be re-imagined as what? Buildings aren’t going to be torn down. Streets are not going to be ripped up. Politicians see what everyone else sees. There are no easy answers but homelessness started when Governor Reagan deinstitutionalized the mentally ill and emptied the psychiatric hospitals in 1981 to save money. Shortsighted politicians only continue the pain.

    1. Ryan Mathews Avatar
      Ryan Mathews

      Bob,

      Bravo! You have hit the historic nail on the head. Reagan’s short sighted policies began to create an environment in which walking down the streets was suddenly an adventure at best and hazardous at worst.

      So, how do we turn the clock back? I’d say we start by targeting specific problems with well designed solutions beginning with getting the seriously mentally ill off the street and back somewhere where they can get the help they need and deserve. There’s no point pretending that shuffling them from street to jail back to the streets helps them or the City of San Francisco. I remember my last pass through SoMa. It was about 1:30 in the afternoon and several people who appeared to be unhoused were beating the Hell out of another person. No police. No intervention. And certainly no tourists.

      Next, there have to be some effective drug and alcohol treatment on-demand programs. We simply don’t have enough beds, staff, and/or funding to even begin thinking about addressing the addiction problem in any city.

      Finding help for even a large portion of the mentally ill and addicted population would go a long way to changing the picture.

      At that point we have to identify folks who are economically marginal, but could be trained, perhaps in the skilled trades where there is always a demand for workers. We also need housing for geriatrics and others who have ended up on the streets for purely economic reasons. San Francisco is an expensive city to live in and many of the working poor there become the unhoused poor.

      That would leave us with the actual criminal element and some number of people who are not mentally ill in the sense that they are a danger to themselves or others, but who for one reason or another simply can’t be helped. The former need to be off the streets and in jail or prison and the latter, I guess, need whatever help welfare programs can offer.

      This is, obviously, not as easy as it sounds. And, if this sounds too utopian and/or expensive, let’s consider the actual recurring cost of maintaining the status quo measured, if this report is accurate, in an eroding tax base, loss of retail and other commercial activity, crime, adverse impacts on tourism, etc., etc.

      And, all that said, as a native Northern Californian, let me assure you I’m more than happy to take on as much property in downtown San Francisco as anyone wants to give me.

      Sure, the streets are tough, but that’s still very expensive real estate,

    2. Scott Norris Avatar
      Scott Norris

      I lived in Dixon, Illinois, Reagan’s hometown, during his first term. Dixon had a large and well-run psychiatric hospital – and after it was shut down, the well-educated and paid staff sold their houses and got the heck out of there, property values tumbled, many shops and offices in town shuttered, and the town’s population fell by over 10%. Within two years, the former hospital complex was turned into a prison. He didn’t bother to return for a victory lap after his re-election…

  8. Patricia Vekich Waldron Avatar
    Patricia Vekich Waldron

    It’s going to take time, imagination, and collaboration between local governments, developers and businesses to reconfigure and rebuild safe, mixed-use center cities.

  9. Brian Cluster Avatar
    Brian Cluster

    Two of the four Rite-Aids in a town north of Temecula, California will be closed next week. The culprit was a combination of weaker sales along with higher rates of theft. It’s unfortunate for this community with an older demographic because now they need to drive further to get their prescriptions or get them delivered.

    This is a time when business, local government, and their communities need to get together to have smart policies that can protect some of the core retail that is needed in each town/ city/community. Towns will likely have less retail in the future which requires fresh innovation to create new venues/activities to keep a lively core.

  10. Craig Sundstrom Avatar
    Craig Sundstrom

    Of course San Francisco is unique – or at least unusual: how many American cities even HAD a vibrant downtown (when Covid hit) ?? (Answer: almost none)
    So I really have trouble with what is meant by downtowns “regaining…retail vitality”: that ship sailed decades ago. They don’t need to be ‘reimagined’, they need a time machine.

  11. Brad Halverson Avatar
    Brad Halverson

    The pandemic has altered retail market forces, even advanced the age of digital shopping, requiring adaption to operations to keep up with customer needs, preferences.

    Elected officials in cities like SF can blame market forces, greedy retail and tech companies all they want. But they need to look in the mirror and figure out if they are going to partner with businesses as part of a thriving community, or be adversaries. Employees and customers don’t like to be harassed from parking garage to a retailers front door. Or having their car windows smashed. Or step in feces. At some point, inertia leads people to shop online, work remotely, or go into a safer town.

    Either city leaders embrace it’s their elected duty to protect everyone, including people who work and shop, or they don’t. But don’t blame retailers and tech companies when they actually decide to shut down and leave.

  12. Mark Self Avatar
    Mark Self

    San Francisco’s troubles are well documented. And true, I was there in December 2022 and the drug use, reduced foot traffic, etc. was on full display. I grew up in the Bay Area and while it is no longer home, the downward slide is very, every sad.

    I believe all of the “it is not a SF only problem” “Tech workers are fleeing cities regardless” “City centers have to remake themselves” comments, while true, act as a “shield” of sorts to mask the big problems, which (okay in my view) are: Drug use, Tolerance of drug use by Police and DA’s, Mentally ill people creating a dangerous environment for others and of course homelessness. Everything else is white noise.

    IF politicians started addressing these problems in a real way (“let’s just make the streets safe to walk on, let’s start there”) I believe the quality of daily life would go up, and gradually San Francisco and other cities experiencing the same challenges would see commerce go up.

    Anyplace where a mentally ill woman can defecate on the front porch of a art dealers storefront, and the art dealer is the one arrested when he hoses her off, well, sorry, but that is a city in decline.

14 Comments
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Neil Saunders
Neil Saunders
Noble Member
27 days ago

The owner of Gump’s once ran as a Republican candidate, so he has a political as well as commercial perspective. However, his remarks need to be assessed on their merits. And what he says is eminently reasonable. Like other cities, San Francisco has struggled to rebuild foot traffic as people visit offices less. There is a homelessness problem which remains unresolved. And while some crimes have fallen, property crime and robbery are both up – not helped by California’s misguided policies on crime stemming from Proposition 47. Elected officials seem to have very few answers and very little imagination. Other retailers, including Whole Foods and Anthropologie, flagged similar problems, and have already voted with their feet and shut up shop. Gump’s following them would be yet another loss for San Fran.

1
Mark Ryski
Mark Ryski
Trusted Member
27 days ago

Downtown business districts across North America were profoundly and systemically impacted by the work-from-home movement created by the pandemic. And despite effort/pressure on the part of employers to get workers to return, many are simply refusing to come back to the office, and some are even prepared to leave their jobs if forced to return. Fewer workers in the downtown/business district creates a vacuum that is getting filled by people that simply do not have a place to live, and this helps create conditions for crime to occur. This is hardly a San Francisco-only problem, it appears to be endemic and growing concern for communities across North America and beyond. 

1
Jeff Sward
Jeff Sward
Active Member
27 days ago

I’m betting that San Francisco is not in the least alone in their plight. How many other downtown business districts are approaching the precipice that San Francisco has now tumbled over? San Francisco may have fallen over the cliff first, but other downtowns are surely approaching similar circumstances. Crime and Covid provided the perfect storm. And the ‘new normal’ that life is bouncing back to is not suiting San Francisco well at all. It didn’t need to get this bad. And to a degree, it’s fixable. When do mistakes get acknowledged? Nothing changes until something changes.

0
Ken Morris
Ken Morris
Active Member
27 days ago

Will the last retailers to leave San Francisco please turn off the lights. While SF is the extreme example of a post-pandemic city in a sorry state, with a vacancy rate of 36%, this is the new reality throughout today’s U.S. Look to town centers as being the new model for in-person shopping. Their mixed-use approach and relative distance from homelessness and gangs combine with giving remote workers a shorter drive to shop, eat, and maybe watch a movie.

And let’s not forget the massive crime factor that has driven out many of San Francisco’s major retailers. Retail theft has become endemic and takes many forms, and there are lots of ways to combat it. But even video surveillance and RFID usage have a hard time keeping up with organized crime.

1
Zel Bianco
Zel Bianco
Active Member
27 days ago

I’m afraid that NYC is not far behind unless the mayor starts addressing the homeless and migrant issues that have made the city even more chaotic than usual. Add the electric scooters, bikes and motorcycles whose riders have no regard for the obeying traffic laws and you have a situation that is ripe for smash and grab incidents at retailers. The CEO of Dollar Tree and Family Dollar indicated that they are having a terrible time of controlling shrink at their stores, so this is happening everywhere.

0
Lucille DeHart
Lucille DeHart
Active Member
27 days ago

Theft is a real profit factor for retailers. New laws allowing for $900 smash and grabs with no accountability are fueling a wave of crime, especially in urban areas. This, coupled with homelessness,are driving businesses to make hard decisions–protect their bottom lines and employees/customers and move to safer locations or stay and build in replenishment and repair into the cost of operations.

1
Bob Phibbs
Bob Phibbs
Active Member
27 days ago

Be re-imagined as what? Buildings aren’t going to be torn down. Streets are not going to be ripped up. Politicians see what everyone else sees. There are no easy answers but homelessness started when Governor Reagan deinstitutionalized the mentally ill and emptied the psychiatric hospitals in 1981 to save money. Shortsighted politicians only continue the pain.

1
Ryan Mathews
Ryan Mathews
Active Member
Reply to  Bob Phibbs
27 days ago

Bob,

Bravo! You have hit the historic nail on the head. Reagan’s short sighted policies began to create an environment in which walking down the streets was suddenly an adventure at best and hazardous at worst.

So, how do we turn the clock back? I’d say we start by targeting specific problems with well designed solutions beginning with getting the seriously mentally ill off the street and back somewhere where they can get the help they need and deserve. There’s no point pretending that shuffling them from street to jail back to the streets helps them or the City of San Francisco. I remember my last pass through SoMa. It was about 1:30 in the afternoon and several people who appeared to be unhoused were beating the Hell out of another person. No police. No intervention. And certainly no tourists.

Next, there have to be some effective drug and alcohol treatment on-demand programs. We simply don’t have enough beds, staff, and/or funding to even begin thinking about addressing the addiction problem in any city.

Finding help for even a large portion of the mentally ill and addicted population would go a long way to changing the picture.

At that point we have to identify folks who are economically marginal, but could be trained, perhaps in the skilled trades where there is always a demand for workers. We also need housing for geriatrics and others who have ended up on the streets for purely economic reasons. San Francisco is an expensive city to live in and many of the working poor there become the unhoused poor.

That would leave us with the actual criminal element and some number of people who are not mentally ill in the sense that they are a danger to themselves or others, but who for one reason or another simply can’t be helped. The former need to be off the streets and in jail or prison and the latter, I guess, need whatever help welfare programs can offer.

This is, obviously, not as easy as it sounds. And, if this sounds too utopian and/or expensive, let’s consider the actual recurring cost of maintaining the status quo measured, if this report is accurate, in an eroding tax base, loss of retail and other commercial activity, crime, adverse impacts on tourism, etc., etc.

And, all that said, as a native Northern Californian, let me assure you I’m more than happy to take on as much property in downtown San Francisco as anyone wants to give me.

Sure, the streets are tough, but that’s still very expensive real estate,

1
Scott Norris
Scott Norris
Member
Reply to  Bob Phibbs
27 days ago

I lived in Dixon, Illinois, Reagan’s hometown, during his first term. Dixon had a large and well-run psychiatric hospital – and after it was shut down, the well-educated and paid staff sold their houses and got the heck out of there, property values tumbled, many shops and offices in town shuttered, and the town’s population fell by over 10%. Within two years, the former hospital complex was turned into a prison. He didn’t bother to return for a victory lap after his re-election…

0
Patricia Vekich Waldron
Patricia Vekich Waldron
Member
27 days ago

It’s going to take time, imagination, and collaboration between local governments, developers and businesses to reconfigure and rebuild safe, mixed-use center cities.

0
Brian Cluster
Brian Cluster
Member
26 days ago

Two of the four Rite-Aids in a town north of Temecula, California will be closed next week. The culprit was a combination of weaker sales along with higher rates of theft. It’s unfortunate for this community with an older demographic because now they need to drive further to get their prescriptions or get them delivered.

This is a time when business, local government, and their communities need to get together to have smart policies that can protect some of the core retail that is needed in each town/ city/community. Towns will likely have less retail in the future which requires fresh innovation to create new venues/activities to keep a lively core.

0
Craig Sundstrom
Craig Sundstrom
Active Member
26 days ago

Of course San Francisco is unique – or at least unusual: how many American cities even HAD a vibrant downtown (when Covid hit) ?? (Answer: almost none)
So I really have trouble with what is meant by downtowns “regaining…retail vitality”: that ship sailed decades ago. They don’t need to be ‘reimagined’, they need a time machine.

1
Brad Halverson
Brad Halverson
Member
26 days ago

The pandemic has altered retail market forces, even advanced the age of digital shopping, requiring adaption to operations to keep up with customer needs, preferences.

Elected officials in cities like SF can blame market forces, greedy retail and tech companies all they want. But they need to look in the mirror and figure out if they are going to partner with businesses as part of a thriving community, or be adversaries. Employees and customers don’t like to be harassed from parking garage to a retailers front door. Or having their car windows smashed. Or step in feces. At some point, inertia leads people to shop online, work remotely, or go into a safer town.

Either city leaders embrace it’s their elected duty to protect everyone, including people who work and shop, or they don’t. But don’t blame retailers and tech companies when they actually decide to shut down and leave.

0
Mark Self
Mark Self
Active Member
26 days ago

San Francisco’s troubles are well documented. And true, I was there in December 2022 and the drug use, reduced foot traffic, etc. was on full display. I grew up in the Bay Area and while it is no longer home, the downward slide is very, every sad.

I believe all of the “it is not a SF only problem” “Tech workers are fleeing cities regardless” “City centers have to remake themselves” comments, while true, act as a “shield” of sorts to mask the big problems, which (okay in my view) are: Drug use, Tolerance of drug use by Police and DA’s, Mentally ill people creating a dangerous environment for others and of course homelessness. Everything else is white noise.

IF politicians started addressing these problems in a real way (“let’s just make the streets safe to walk on, let’s start there”) I believe the quality of daily life would go up, and gradually San Francisco and other cities experiencing the same challenges would see commerce go up.

Anyplace where a mentally ill woman can defecate on the front porch of a art dealers storefront, and the art dealer is the one arrested when he hoses her off, well, sorry, but that is a city in decline.

0