The city of Los Angeles is witnessing a concerning trend as the number of new business licenses continues to decline.
Data reported by Crosstown LA reveals a steep 7.4% drop in 2024 alone, amounting to a staggering 50% decrease since 2015.
This decline has raised significant concerns about the future of local commerce, with diverse opinions emerging on its implications.
Some view the drop as part of a broader shift in the city’s business culture, while others interpret it as a sign of the city’s inevitable decline.
Many attribute the fall in business licenses to ongoing repercussions from the Covid-19 pandemic.
As consumer preferences shifted during and after the pandemic, many businesses struggled to adapt, leading to closures and reduced customer traffic.
Local eateries and cafes, once bustling with office workers, are now facing dwindling patronage due to hybrid work arrangements and altered consumer habits.
Larry Kosmont, an economic development consultant, emphasized the impact of digital flexibility and changing economic trends, which contribute to the declining number of business licenses.
“The conversion would indicate and support why you’re seeing a drop in business licenses in L.A.,” he stated.
Echoing Kosmont’s sentiments, Eddie Navarette, founder of FE Design & Consulting, expressed concern for the future of Los Angeles’s business landscape.
He urged for a collaborative approach among stakeholders to address the various challenges facing the city’s economy.
The closures of several prominent local establishments have served as a stark reminder of the ongoing struggles within the business community.
Notable restaurants, including Michelin-starred Shibumi and the iconic Cole’s French Dip, announced their closure after years of successful operation.
Cedd Moses, owner of Cole’s, cited multiple factors contributing to the shutdown, including the pandemic’s lingering effects, ongoing strikes by the Writers Guild of America and Screen Actors Guild, and rising operational costs.
The combination of these challenges has made it increasingly difficult for business owners to remain viable.
Timothy Hollingsworth, former chef of the upscale restaurant Otium, also provided insights into the hurdles faced by restaurateurs during the pandemic.
After being closed for 18 months, Hollingsworth’s venture struggled to return to profitability and has not announced a new location more than a year later.
Aside from pandemic-related disruptions, the city’s high commercial rent and purchase costs have significantly deterred entrepreneurs from establishing new businesses.
Kosmont pointed out that Los Angeles has one of the highest costs of doing business in the nation, compounded by a discouraging economic environment.
Additionally, he noted a nationwide trend of businesses favoring suburban locations over urban spaces, influencing locational decisions for new establishments.
Despite these challenges, policymakers have yet to develop a clear solution to the declining number of business licenses, leaving many wondering about the future.
Nella McOsker, CEO of Central City Association, highlighted the bureaucratic barriers that prospective business owners face when trying to obtain licenses and permits.
She emphasized that the slow and cumbersome process can discourage entrepreneurs, particularly new ones, from initiating their ventures in Los Angeles.
Additionally, she pointed out that landlords are less likely to absorb tenant improvement costs, which further strains the financial burden on new businesses before they even open.
McOsker advocated for a mindset shift among city officials to foster a more welcoming environment for business development.
She called for legislative and cultural reforms to enhance the local business climate and encourage innovation.
While many analysts view the decline in business licenses as a cause for concern, some remain optimistic about the future of Los Angeles.
Chris Thornberg, founding partner of Beacon Economics, suggests that the decrease could reflect a lack of interest in traditional business licenses rather than a complete collapse of the local economy.
He pointed to improvements in labor force participation and rising wages, which may signal underlying positive trends.
According to Thornberg, industries such as government, education, and hospitality have shown job growth, offering a glimmer of hope amid the downturn.
Looking ahead, the upcoming 2026 FIFA World Cup and the 2028 Olympic and Paralympic Games are anticipated to bring an influx of new businesses and increased foot traffic to the city.
McOsker expressed optimism that these global events could catalyze revitalization efforts and reignite interest in entrepreneurship throughout Los Angeles.
She concluded by suggesting that sometimes crises can breed opportunities, prompting leaders and stakeholders to re-evaluate their strategies and collaborate towards a bright future.
As the city grapples with its current challenges, the path ahead remains uncertain.
However, the call for collaboration and innovative solutions may yet enable Los Angeles to rebound from its economic troubles.
image source from：labusinessjournal
