Closures take S.F. retail vacancies to a record high in Q1
Store shutterings are driving San Francisco's retail vacancy rate to new highs — and double the national rate.
Closures drove San Francisco’s retail vacancy rate to nearly 8% in the first quarter of 2024, setting a new record for the city. The national retail vacancy rate, meanwhile, has hit an all-time low of 4%, according to CoStar’s April Real Estate Data Update.
According to Cushman & Wakefield’s latest San Francisco Retail Market Report, the 7.9% high is a large increase from its low of 3.1% in the third quarter of 2019. The decline in retail performance was primarily due to the worsening conditions in Union Square and the surrounding downtown areas.
In the first quarter of 2024, the overall vacancy rate in Union Square reached a new peak, climbing to 20.6%. This reflects a modest increase of 10 basis points from the previous quarter’s rate of 20.5% and a notable 510 bps surge from the 15.5% rate recorded last year.
In terms of supply, Cushman & Wakefield said the market is experiencing limited new construction and the overall inventory of retail space in San Francisco remained unchanged at 51.3 million sq. ft. (msf), with 4.1 msf vacant by the end of the first quarter.
A wave of closures in San Francisco’s Union Square continued in 2024, with Lacoste, The North Face, and Jeffrey’s Toys all closing locations. In March 2024, Macy’s announced the closure plan of its flagship and iconic location in Union Square as part of a broader strategic restructuring. The department store will remain open until it finds a new buyer for the building.
Despite these closures, Union Square saw a handful of new openings. Luxury watchmaker A. Lange & Söhne, Spanish shoemaker Carmina, and Starlite, a revival of the former Harry Denton’s Starlight Room, all opened in the neighborhood.
Closures outside of Union Square continued at Emporium Centre San Francisco (formerly Westfield San Francisco Centre) with Adidas, Aldo, Body Shop, J. Crew, L’Occitane, Lucky Brand, and Madewell closing at the beginning 2024.
Despite increased retail vacancies, the city experienced an increase in tourism last year. According to the San Francisco Travel Association, San Francisco welcomed 23.1 million visitors in 2023, marking a 5.2% rise compared to the previous year. Visitor spending also rose by 17.8% to $8.8 billion. International visits played a significant role in driving San Francisco’s tourism recovery, with a 26% increase in 2023. Over 2 million international visitors contributed $4.64 billion in visitor spending in the city.
Cushman & Wakefield is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries.