Bay Watch – Business Openings and Closures

Bay Watch: A Weekly Look into the Bay Area Economy

March 9, 2023

It’s been three years since the onset of the COVID-19 pandemic, and many businesses in San Francisco have struggled to stay afloat amid new variants, shutdowns, and a shift to remote work. Throughout the pandemic, the spotlight has been on downtown activity as a measure of the city’s economic health and vitality – but how much worse is downtown faring in terms of business starts and closures? Are trends downtown representative of the city at large, or are other neighborhoods bolstering the city’s business activity?


A north/south divide

From March 2020 to February 2023, the City of San Francisco saw almost as many businesses close as open, based on real time data from the Office of the Treasurer and Tax Collector, which tracks businesses that are registered and pay taxes to the city. Over this three year period, 29,456 businesses of all sizes closed, while 29,998 opened, a small net increase of 532 new businesses. The Financial District and Chinatown took the biggest hits, accounting for nearly 20% of the city’s overall business closures. For every business that closed in the Financial District, 0.5 businesses opened. The city overall fared better, seeing 1.02 business openings for every business closure, largely attributable to the city’s southern-most neighborhoods such as Bayview/Hunter’s Point, Visitacion Valley, Excelsior, Portola, and Oceanview/Merced/Ingleside, all of which saw more business openings than closures during the pandemic.


When we analyze business activity for only the last 12 months (Feb 2022 through Feb 2023) – FiDi and Chinatown were the only two neighborhoods in the entire city to see more businesses close. This indicates that most of the city, outside of the downtown core, has started to recover its pre-pandemic business activity.


Heading in the right direction

Overall, the city is in an upward trajectory in terms of net business starts. In 2022, 1.45 businesses opened across San Francisco for every business that closed, a higher ratio than the first two years of the pandemic, and a higher ratio than years leading up to the pandemic. As businesses and employees alike enter an age of remote work, residential neighborhoods are seeing an uptick in business activity and commercial vitality, compensating for the decline in new businesses in and around downtown.

The overall number of new business starts is still below what it was pre-pandemic. In 2019, San Francisco saw 14,270 new businesses open, compared to 10,080 for 2022. However, factoring in the number of business closures, the city is still netting a higher number of new businesses (3,140 in 2022 versus 1,540 in 2019). While we may see fewer businesses open than the historic average, we’re also seeing far fewer closures.