San Francisco Retail Market Report

Downtown retailers face headwinds. A large drop in daytime foot traffic due to low office utilization rates, coupled with ongoing social issues, continue to create obstacles for downtown retailers. High living costs have also contributed to a shrinking consumer base, as there were roughly 100,000 fewer people living in the metro in March compared to pre-pandemic. The impact of these headwinds contributed to San Francisco recording four consecutive quarters of negative net absorption entering April, lifting vacancy to 6.1 percent, the highest rate in more than 15 years. Although retail performance has been sluggish in the CBD, suburban submarkets have fared much better in recent quarters, as they are less dependent on daytime commuters, providing a more stable consumer base. Vacancy in Belmont-San Carlos, Menlo Park and Redwood City was roughly 300 basis points below the market average at the end of the first quarter.