Yes. Proximity can affect Local Services Ads visibility because Google considers how close your business is to the customer when determining which local service providers are relevant. A business that is closer to the searcher may have an advantage over a farther-away business, although proximity is not the only factor.
Your service area, business location, service type, reviews, responsiveness, and competition can also affect visibility. So, being physically close to a customer does not guarantee that your LSA will appear first.
If you are getting strong visibility in some areas but weak visibility in others, compare your service-area settings and lead performance by location. This can help you identify where your LSA coverage is strongest and where adjustments may be needed.