Starboard Commercial Real Estate

Hans Hansson | September 24, 2018

Today, the retail community is faced with many serious challenges.  From the threats of the online shopping world to the scarcity of labor– and for San Francisco retail—the overall high costs of doing business.  But the impact of the city’s homeless crisis is taking a real toll on local retailers. 

 

Throughout almost any neighborhood in the city, you will see empty retail stores, which were once flourishing businesses.  Union Square, Market Street, and of course the downtown financial district is seeing retailers struggle. One challenge to our retailers, unique to San Francisco, is the negative impact of our homeless issue.

 

The city is searching to find answers to solve this massive crisis, while simultaneously spending an obscene amount of money ($305 million a year) on programs that haven’t worked.  

 

Our new mayor, London Breed, promises to find a solution to the homeless problem by putting in place mental health and addiction treatment programs, as well as building new housing. The problem with building new housing is that it will take years before it becomes a reality. Instead, we should be looking for solutions that will help homeless today—such as the Laguna Honda Hospital project. 

 

Most retailers feel alone in their fight to keep their storefronts clear of loitering homeless, which deter shoppers from entering their stores. Encampments will often result in the surrounding neighborhood to be filled with infected needles, feces, and garbage. What does not get mentioned when we talk about homeless is its impact on all businesses, particularly retail, which is already declining.  What is that loss of business equal to in dollars?  

 

Today, the city is combatting businesses shutting their doors, which many community organizers believe is due to the high cost of rent and the gentrification of our city. However, they are missing a much bigger issue–the effect of homelessness on the psychology of a sale.  

 

Sales is driven by a buyer’s motivation to purchase.  A customer needs to first feel good, then they have to want something, and then they have to make the leap to purchase.  Today, if you see a homeless person struggling to survive as you enter a handbag store, or a shoe store–– do you really believe that most people can simply turn off their feelings of compassion and empathy to come to the decision to buy a new pair of shoes? This may seem overly simplified, but this is the reality.  

 

Homelessness also brings about more theft, which further erodes a buyer’s confidence and desire to purchase.  The downtown Ross store and many local merchants experience homeless robbing their stores without any penalty daily. Police are almost powerless to do anything because unless the amount stolen is valued over $900, the penalty is no worse than a traffic ticket – which the homeless cannot pay anyway. 

 

We need real changes implemented to help the homeless community, and also help support our local retailers and bring business back to their stores. We need to have more walking police officers on the street, moving loiterers away from shopping areas and reinforcing laws among homeless that ban illegal drugs. We need to look at ways to develop policy and direction that will support them now– not later,  before we lose one more retailer. 

Photo Credit: David Holt London Flickr via Compfight cc
Posted 1 month, 6 days ago on September 24, 2018
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