The pandemic caused a significant shift in how Americans worked and lived, and it’s reflecting in the U.S. economy. According to a recent Yelp report, the growth rate in non-downtown areas was greater than in downtown areas during the pandemic, and it was higher in 2022 versus prior years. In addition, certain types of businesses, such as food retailers and restaurants, outpaced other types of businesses outside of downtown in terms of commercial growth.
As a result of businesses’ long-term commitment to a hybrid work environment or a fully remote workplace, downtown streets will be looking different for years to come. In order to determine how the shift to remote work has impacted the revitalization of local companies in cities across the United States, Yelp looked at how annual business growth has changed in downtown areas and non-downtown areas in addition to the number of businesses in six key U.S. cities.
In 2022, business growth in non-downtown areas is higher than in pre-pandemic times, according to Yelp data. Moreover, food establishments and restaurants are growing faster than other types of businesses in non-downtown areas.
During the pandemic period (April 2020 – October 2022), non-downtown business growth in major metropolitan cities was much higher than downtown business growth. Downtown business growth accelerated by 116%, on average, while non-downtown business growth accelerated by 313%, on average.
Yelp compared the number of businesses in 2022 to the average number of businesses prior to the pandemic (2017-2019). While both downtown and non-downtown areas grew, non-downtown neighborhoods grew significantly more in Portland, OR; San Francisco, CA; Austin, TX; Chicago, IL; and New York City.
Non-downtown neighborhoods in Portland grew 157% faster than downtown, the largest difference in business growth between downtown and non-downtown areas of any city studied. Downtown Portland experienced business closures due to the pandemic as well as nearly 200 days of protests following the murder of George Floyd calling for racial justice and police reform, both of which may have contributed to non-downtown neighborhoods recovering more quickly than downtown.
Non-downtown San Francisco saw an 88% increase in the number of businesses compared to downtown areas. The cities with the highest non-downtown growth compared to the cities’ downtowns were Austin (74%) and Chicago (68%).
Non-downtown New York City saw a 60% increase in business growth compared to downtown. New York’s downtown business growth since 2020 has been 13% lower than before 2020, possibly due to early business closures due to the pandemic.
Miami saw the smallest percentage difference, with non-downtown areas growing by 7% more than downtown areas, but overall saw strong business growth—the average growth rates for both downtown and non-downtown areas in Miami are the highest among the six cities studied, likely due to the growing number of tech companies that have relocated to the area.
Some business types are driving more expansion in non-downtown areas than others. Non-downtown areas have grown faster than downtowns in the past five years, particularly in the Food & Restaurants, Nightlife & Bars, and Hotels & Travel industries, compared to the pre-pandemic average. Non-downtown areas of many cities saw the greatest surge in business in the food sector post-pandemic, compared to pre-pandemic. Food businesses are expanding rapidly in non-downtowns in San Francisco (4%), Austin (12%), Chicago (8%), New York (8%), and Portland (8%). In San Francisco, restaurants generated the most business expansion (4 percent).
Both downtowns and non-downtowns are growing across the country, which is good to see. Nonetheless, the rapid growth of non-downtowns shows how remote work can help businesses in residential city neighborhoods rather than downtowns.
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