While Silicon Valley’s tech sector is thriving, cranking out IPOs and flooding the region with high-paying jobs, its retail industry is struggling to keep its boutiques and tiny mom and pop shops open.
The number of retail businesses — particularly small retail businesses — has dropped significantly in the Bay Area between 2007 and 2017, according to data from the state Economic Development Department. Experts blame a host of factors, including high rents, increased competition from online vendors, a rising minimum wage and increased health care costs.
The average rent per square foot for retail space in San Jose increased nearly 9 percent between 2015 and 2017. It also rose 9 percent in Oakland, and in San Francisco, it inched up almost 5 percent. Even incremental rent hikes can cause trouble for small businesses, which often operate on a thin profit margin.
At the same time, Bay Area home prices and rents have become so expensive that many local retail workers can no longer afford to live near their jobs, forcing them to commute long hours or quit.