Downtown Is the Prime Business Area? Not So Fast, Says Yelp

Being located downtown isn’t all that it’s cracked up to be, according to the Yelp Downtown Analysis, which was released Tuesday. The business directory and crowdsourced review forum found that prior to the pandemic, from 2017 through 2019, the average yearly business growth was very similar between downtowns and non-downtowns of main metropolitan cities, but while both areas continued to grow with the onset of Covid-19 in 2020 and through this year, average yearly business growth in non-downtown areas has nearly tripled that of downtown. Yelp wrote in its report, “The pandemic resulted in significant changes to how Americans work and where they live, with many companies transitioning to remote work. As companies begin to permanently commit to a hybrid work model or, like Yelp, a fully remote workplace, the landscape of office-centric downtowns has changed for the foreseeable future. To better understand how the shift to remote work has impacted the recovery of local businesses in cities across the U.S., Yelp looked into how the average yearly business growth in downtown and non-downtown areas has changed, as well as how the number of existing businesses has changed, across six major cities in the U.S.” The company found that while downtown business growth accelerated by 116%, on average, in those six cities from 2020 through 2022, non-downtown business growth skyrocketed by 313%, on average. The six cities were: Austin, Texas: Non-downtown business growth was 74% higher than grown in downtown areas.Chicago: Non-downtown business growth outpaced downtown by 68%.Miami: The gap was smaller, at just 7%.New York: While non-downtown business growth was 60% more than in downtown areas, downtown New York was also the only area of the six cities studied by Yelp to see yearly business growth pre-2020 outpace post-2020, by 13%, likely due to the significant number of business closures early in the pandemic.Portland, Ore: There was a whopping 157% gap in favor of non-downtown business growth compared with downtown, and Yelp wrote, “In addition to business shutdowns due to the pandemic, downtown Portland also underwent nearly 200 days of protests following the murder of George Floyd calling for racial justice and police reform, which may have contributed to non-downtown neighborhoods recovering faster than downtown.”San Francisco: Business growth in non-downtown areas was 88% higher than downtown. Yelp said sectors that are following the trend of more growth in non-downtown areas than downtown include food businesses, hotel/travel, nightlife/bars and restaurants, adding that in the first five cities listed above, businesses in the food category drove the highest growth, at 12%, 8%, 26%, 8% and 8%, respectively, while restaurants did so in San Francisco, at 4%. Yelp wrote, “While it’s promising to see both downtowns and non-downtowns continue to grow, the rapid growth in non-downtowns across the country demonstrates the positive economic opportunity that remote work has brought businesses in residential city neighborhoods, versus those in office-centric downtowns.”

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Downtown Is the Prime Business Area? Not So Fast, Says Yelp

Growth in non-downtown areas outpaced downtown in six cities covered in a new study

David Cohen

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