Peninsula/San Mateo Retail Market Report

The following reflects Peninsula retail market conditions as of Q2 2026.

The Peninsula retail market in 2Q 2026 remained stable, with vacancy rates holding below 5% and asking rents continuing to edge higher. Retail development activity increased substantially compared to a year ago, while positive quarterly absorption helped improve market fundamentals. Although average sale prices softened year-over-year, the market continues to benefit from limited vacancy and steady tenant demand. Explore our full Peninsula retail market report for detailed insights into leasing activity, investment trends, and development across the region.

Frequently Asked Questions

What is the retail vacancy rate in the Peninsula market in Q2 2026?

The Peninsula retail vacancy rate was 4.5% in 2Q 2026, according to Kidder Mathews research. That’s up 30 basis points from 4.2% in 2Q 2025, but only a slight increase from 4.6% the prior quarter, and vacancy remains below 5% overall (Data source: CoStar).

What are average asking rents for Peninsula retail space in Q2 2026?

Average asking rents for Peninsula retail space reached $3.21 per square foot per month in 2Q 2026, according to Kidder Mathews research. That’s a 1.85% increase from $3.15 PSF/mo in 2Q 2025, though slightly below the $3.24 PSF/mo recorded in 1Q 2026 (Data source: CoStar).

How much retail space is under construction in the Peninsula in Q2 2026?

There was 295,848 SF of retail space under construction in the Peninsula as of 2Q 2026, according to Kidder Mathews research. That represents a 58.55% increase from 186,601 SF a year earlier, though the total was unchanged from 1Q 2026. Active projects include VillaSport Athletic Club in Redwood City (97,101 SF, delivering 4Q 2026) and 79 Saint Francis Sq in Daly City (16,247 SF, delivering 3Q 2026) (Data source: CoStar).

What was net absorption for Peninsula retail in Q2 2026?

Peninsula retail recorded 35,282 SF of positive net absorption in 2Q 2026, according to Kidder Mathews research. Net absorption measures the net change in occupied space, so a positive figure indicates tenants took more space than they vacated. This marks a notable improvement from negative 72,655 SF absorbed over the same period in 2025, and year-to-date 2026 absorption stood at negative 7,403 SF (Data source: CoStar).

How much new retail space was delivered in the Peninsula in 2026?

Only 2,630 SF of retail space was delivered year-to-date through 2Q 2026 in the Peninsula, according to Kidder Mathews research. No new space was delivered in the second quarter itself, reflecting a highly constrained supply pipeline (Data source: CoStar).

What was the largest retail sale transaction in the Peninsula in Q2 2026?

The largest reported retail sale in the Peninsula in 2Q 2026 was Villa Plaza in San Mateo, a 13,639 SF property that sold for $8,900,000, or $652.54 per square foot, according to Kidder Mathews research. The buyer was Kwuan And Chung 2022 Family Trust and the seller was Villa Plaza LMSFF LLC (Data source: CoStar).

What is the average retail sale price per square foot in the Peninsula in Q2 2026?

The average Peninsula retail sale price was $470 per square foot in 2Q 2026, according to Kidder Mathews research. That’s a 12.22% decrease from $536 PSF in 2Q 2025, following elevated pricing levels in the prior year (Data source: CoStar).

What were the largest retail lease transactions in the Peninsula in Q2 2026?

The largest reported retail leases in the Peninsula in 2Q 2026 included Bayhill Shopping Center in San Bruno/Millbrae (4,003 SF, April 2026) and 2285 El Camino Real in San Mateo (1,500 SF, April 2026), according to Kidder Mathews research. A 1,195 SF lease at 267 Baldwin Ave in San Mateo was signed by Mini Market Marys Tipocos GT in May 2026 (Data source: CoStar).

What is the outlook for the Peninsula retail market heading into the second half of 2026?

The Peninsula retail market enters the second half of 2026 on stable footing, with vacancy holding below 5%, asking rents trending upward, and net absorption turning positive after a weak 2025, according to Kidder Mathews research. A larger under-construction pipeline compared to a year ago suggests continued, though measured, development activity ahead (Data source: CoStar).

Last updated: Q2 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.

2Q 2026 Peninsula Retail Market: Key Data Points

Explore our full Peninsula retail market review for deeper insights into leasing trends, sale activity, and submarket performance.

• Vacancy Rate Remains Low: Peninsula retail vacancy measured 4.5% in 2Q 2026, increasing just 30 basis points year-over-year while remaining below 5%.
• Asking Rents Continue to Rise: Average asking rents reached $3.21 PSF per month, a 1.9% increase year-over-year.
• Construction Pipeline Expands: Retail space under construction totaled 295,848 SF, representing a 58.6% increase from one year ago.
• Sale Prices Moderate: The average retail sale price measured $470 PSF, a 12.2% decrease year-over-year following elevated pricing levels in 2025.
• Net Absorption Improves Significantly: The market recorded 35,282 SF of positive net absorption in 2Q 2026, compared with negative 72,655 SF during the same period last year.
• Limited New Supply Delivered: Only 2,630 SF of retail space was delivered year-to-date in 2026, reflecting a highly constrained supply pipeline.

Market Breakdown — Quarterly Comparison

Market Breakdown — Year-to-Date

Significant Sale Transactions 2Q 2026

Significant Lease Transactions 2Q 2026

Significant Under Construction