These retailers are bucking the trend and opening stores in San Francisco despite the city’s ‘doom loop’

There has been an exodus of retailers in downtown San Francisco, with a Nordstrom branch being among the recent closures.

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Some retailers are fleeing San Francisco as fears grow over rising crime and a worsening economic environment.Nordstrom, Whole Foods, and Anthropologie have all closed locations in the city in the past year.Many retailers are staying put and are even expanding their presence.

San Francisco is in the middle of a retail exodus.

The city has seen a number of high-profile businesses close locations in recent months, as fears over crime, soaring rents, and a worsening economic environment have grown.

The most recent exit was Nordstrom, which closed the doors of its five-story department store in Westfield San Francisco Centre in August, citing falling foot traffic and the “changing dynamics” of downtown San Francisco.

Other high-profile losses include Whole Foods, Amazon Go, and Office Depot. The shrinking retail scene has contributed to a general real estate slump as large tech companies have also downsized, with the city estimated to have 18 million square feet of empty office space as of June.

However, despite the talk of San Francisco’s “doom loop,” many businesses have chosen to stay — and some are even moving into the Golden City’s vacant downtown storefronts.

The brands expanding and moving in

Swedish furniture chain Ikea opened a new branch in San Francisco’s Mid-market area in August, occupying a 52,000-square-foot location as part of its strategy to open smaller stores in city centers.

“As a new neighbor in the community, we are working to contribute and create a comfortable and welcoming environment,” a spokesperson for Ikea US told Insider, adding that Ikea has had stores in the Bay Area since 2000.

They continued, “We are excited to strengthen our presence in San Francisco and intend to test and try different formats to meet the needs of our San Francisco consumers for many years.”

The entrance of Ikea’s new San Francisco store.

Tayfun Coskun/Anadolu Agency via Getty Images

Chanel is also making moves in downtown San Francisco. The luxury fashion brand moved from a smaller location in the city after purchasing a three-story building at 340 Post Street, across from Union Square, for $63 million, the Real Deal reported. Chanel did not respond to Insider’s request for comment.

Another French luxury brand, Yves Saint Laurent, doubled its space in Union Square last year by leasing three floors of the I. Magnin & Co. building. The move came despite luxury stores in downtown San Francisco being targeted by a series of high-profile robberies.

And luxury jewelry brand Van Cleef & Arpels opened its first standalone location in Union Square in 2022.

A Banana Republic store at Gap’s San Francisco headquarters.

Jay Watson

Other chains, such as Banana Republic, are downsizing but staying in the area.

Its parent company, Gap Inc, has been closing other locations in San Francisco. These include its downtown Old Navy site in July and its Athleta store on Sutter Street. But this isn’t unique to the city. The clothing giant has been shutting stores across the country in a bid to cut costs as it grapples with declining sales.

A spokesperson for Gap told Insider that the company was committed to San Francisco and had deep roots there.

“It’s where we were founded and the region where thousands of our team members still live and work today,” they said.

“We recently invested in renovating our Downtown San Francisco hub where our teams come together to develop new consumer experiences and product innovations. As part of that remodel, we opened four new stores at our headquarters,” they added.

AI boom boosts city

AI startups are giving San Francisco a much-needed boost. The city is home to 11 of the top 20 AI companies in the US, data from VC firm NFX, which was shared with Insider, showed. Many of these companies are hunting for office space.

Fintech startup Brex decided to close its San Francisco office and switch to remote working during the pandemic but reopened a San Francisco location earlier this year to cash in on the opportunities offered by the AI boom.

San Francisco skyline.

Alexander Spatari/Getty Images

“Our cofounder and co-CEO, Henrique Dubugras, was really excited by what he saw as going on in the Bay Area with regards to AI and how big of an opportunity it was going to be,” Michael Tannenbaum, Brex’s COO, told Insider. “So we wanted to get closer to that.”

He said that the sheer density of talent and innovation in San Francisco meant the city remained an ideal place for startups to develop.

“It’s a forward-thinking town,” Tannenbaum said. “It’s always been somewhere where a lot of trends have started – it’s just a place where ideas can get off the ground.”

Angela Hoover, the CEO and cofounder of Andi, an AI search-engine startup, moved the company to San Francisco earlier this year.

“Andi was initially based in Miami, which has a growing, vibrant startup scene. But increasingly, the heart of AI seemed to be beating in the Bay Area,” she told Insider.

The move has been enormously beneficial for the company, Hoover said, as it allowed Andi to accelerate its product development and has made hiring easier.

“It was a great decision,” Hoover said. “For an AI startup, there’s no better place to be right now than in San Francisco.”

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