Community business grew by more than 88%

Before COVID, businesses in San Francisco were opening at roughly the same rate in downtown San Francisco neighborhoods as shops and restaurants in uptown neighborhoods from Excelsior to Glen Park to Sunset.

However, according to a Yelp report, since the pandemic, new businesses in neighborhoods outside the city’s downtown area have grown by 88 percent compared to public-facing businesses in the central areas of the Financial District (SoMa and Civic Center).

For this report, Yelp looked at six downtowns: Portland, Austin, New York, Chicago, Miami and San Francisco. Yelp data analysts tabulated the “average annual business growth” in the city’s central and outer neighborhoods from 2017 to 2019. It then compared the average annual growth to the acceleration in business formation since the start of COVID. The report only includes businesses with Yelp pages—primarily public-facing stores, restaurants, or services.

Not surprisingly, San Francisco has one of the fewest “back-to-the-office” numbers of any downtown city, with far more new businesses in its outer neighborhoods than in the Financial District, SoMa, or Civic Centers. According to Yelp, business growth in San Francisco’s non-city areas is 88% higher than that of inner-city areas.

“As many companies in San Francisco move to a more permanent hybrid work model, or, like Yelp, a completely remote workplace, we’re seeing long-term changes in the landscape of downtown San Francisco,” Pria Mudan, head of data science at Yelp, said via email . “If fewer people go to work in the city centre from Monday to Friday, then there are greater opportunities for businesses in non-city centre communities to grow, with lower rent and operating costs.”

Only Portland saw a bigger difference—where businesses outside the city center grew 157% more than those in the city center. Austin’s downtown-neighborhood difference ranks third, with a 74 percent increase in non-city-center strata.

Since the pandemic, Miami has been aggressively recruiting California tech companies, driving the healthiest downtown growth — where business growth is only 7 percent behind the neighborhood.

A surprising piece of news that Yelp researchers found is that from 2017 to 2019, San Francisco’s downtown area and neighborhoods lost slightly more businesses than they formed. During that period, businesses in inner-city neighborhoods posted an average net loss of 0.14%, compared with 0.76% in neighborhoods.

Since 2020, non-city neighborhoods have added an average of 1.52% of new business per year, led by restaurants.

JK Dineen is a staff writer for the San Francisco Chronicle. Email: Twitter: @sfjkdineen

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