- Bifurcation of Retail Market
Retail in San Francisco’s Union Square and the central business district continues to face challenges with the vacancy rate at 15.3%. However, most of the neighborhoods outside the core are thriving, with the West of Van Ness submarket recording a 3.0% vacancy rate.
The unemployment rate increased to 2.7%. Nevertheless, the median household income remained the second highest in the country after San Jose at $140,300, up 5.2% YOY.
- Foot Traffic & Visitors
Office occupancy reached the highest post-pandemic level at 46.5% at the end of June 2023. The total number of visitors to San Francisco in 2022 was 21.9 million spending $7.4 billion. The total visitor spending was only 77.1% of 2019’s figure. Average monthly visitors to Union Square was 920,400, up 5.3% from a year ago.
- Union Square Retail
Overall vacancy rate stood at 16.2%, up 70 bps from last quarter. With more closures expected in the summer, the vacancy rate is projected to increase further. Rental rates for premier ground floor retail space remained flat at $495 psf per year.
- Union Square’s Outlook
Challenges in the market also presents a tremendous opportunity for retailers since Union Square historically has been one of the most expensive and toughest markets with little inventory. Currently, there are new stores under construction as well as existing stores expanding to meet market demands.
Source: BLS, BOC, Moody’s Analytics, Kastle Access Control Systems, Springboard & Union Square Alliance, San Francisco Travel, Costar, Cushman & Wakefield Research