The following reflects Peninsula retail market conditions as of Q3 2026.
The Peninsula retail market in Q3 2026 experienced rising vacancy, easing unemployment, increasing asking rents, and higher construction deliveries compared to the same period last year. Explore our full Peninsula retail market report for deeper insights into leasing activity, investment sales, and development trends across the region.
Frequently Asked Questions
What is the current retail vacancy rate in Peninsula as of Q3 2026?
The retail vacancy rate in Peninsula was 4.4% in Q3 2026, according to Kidder Mathews research. This is a 20 basis point increase from 4.2% in Q3 2025, though it edged down slightly from 4.5% in the prior quarter. (Data source: CoStar)
What are average retail asking rents in Peninsula in Q3 2026?
Average retail asking rents in Peninsula were $3.19 per square foot per month in Q3 2026, up 1.14% year-over-year from $3.15 in Q3 2025. Rents were nearly flat quarter-over-quarter, edging down from $3.20 in Q2 2026. (Data source: CoStar)
What was retail net absorption in the Peninsula market in Q3 2026?
Peninsula retail recorded positive net absorption of 69,405 square feet in Q3 2026, meaning tenants occupied more space than they vacated during the quarter. Year-to-date net absorption reached 119,549 square feet, a sharp improvement from -93,405 square feet absorbed over the same period in 2025, according to Kidder Mathews research.
How much retail space is under construction in the Peninsula market?
There were 97,101 square feet of retail space under construction in Peninsula as of Q3 2026, down 48.48% from 188,478 square feet a year earlier. The largest project underway is the 97,101-square-foot VillaSport Athletic Club in Redwood City, slated for delivery in 4Q 2026, with Candlestick Point in Bayview/Hunters Point (7,200 SF) delivering in 3Q 2029.
How much retail leasing activity occurred in Peninsula in Q3 2026?
Significant retail leases in Q3 2026 totaled 14,327 square feet across three notable transactions, led by VEG Emergency Group’s 9,590-square-foot lease in San Bruno/Millbrae signed in August 2026. Additional leasing activity was recorded in San Mateo, according to Kidder Mathews research.
What was the largest retail lease signed in Peninsula in Q3 2026?
The largest lease transaction in Q3 2026 was VEG Emergency Group’s 9,590-square-foot lease in San Bruno/Millbrae, signed in August 2026. Other notable leases included a 3,487-square-foot deal at Laurelwood Shopping Center in San Mateo signed in September 2026 and a 1,250-square-foot lease at 55 E 4th Ave in San Mateo signed in July 2026, according to Kidder Mathews research.
What was the largest retail sale in Peninsula in Q3 2026?
The largest retail sale in Q3 2026 was Veracom Coachworks in San Mateo, a 1,014-square-foot property that sold for $12,066,000, or $11,899.41 per square foot. Other significant sales included 369 Grand Ave in South San Francisco ($2,000,000, $323.47/SF) and Los Metates Taqueria in South San Francisco ($1,050,000, $662.88/SF). (Data source: CoStar)
How have retail investment sale prices and cap rates changed in Peninsula?
Average retail sale prices in Peninsula fell to $327 per square foot in Q3 2026, down 48.76% from $637 per square foot in Q3 2025. The average cap rate compressed to 0.0% in Q3 2026 from 5.2% a year earlier, a decline of 520 basis points, according to Kidder Mathews research.
What is the outlook for the Peninsula retail market heading into Q4 2026?
Peninsula retail vacancy has ticked up modestly while asking rents continue to grow, and the construction pipeline has narrowed considerably compared to a year ago. With unemployment trending lower and net absorption turning positive year-to-date, market fundamentals in Peninsula retail remain comparatively stable heading into Q4 2026, according to Kidder Mathews research.
Last updated: Q3 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.
Q3 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: The retail vacancy rate in Peninsula was 4.4% in Q3 2026, up 20 bps year-over-year from 4.2%, though down slightly from 4.5% in Q2 2026.
- Average Asking Rents: Asking rents averaged $3.19/SF/Mo in Q3 2026, up 1.14% year-over-year from $3.15/SF/Mo, and roughly flat versus $3.20/SF/Mo last quarter.
- Net Absorption: Net absorption totaled 69,405 SF in Q3 2026, bringing year-to-date net absorption to 119,549 SF, a reversal from -93,405 SF over the same period in 2025.
- Construction Pipeline: 97,101 SF of retail space was under construction as of Q3 2026, down 48.48% year-over-year from 188,478 SF, with 16,247 SF delivered during the quarter.
- Investment Sales: The average sale price was $327/SF in Q3 2026, down 48.76% from $637/SF a year ago, while the average cap rate fell to 0.0% from 5.2%.
- Largest Sale: Veracom Coachworks in San Mateo sold for $12,066,000 ($11,899.41/SF).
- Largest Lease: VEG Emergency Group signed a 9,590 SF lease in San Bruno/Millbrae.
Market Breakdown — Quarterly Comparison
| Metric | 3Q26 | 2Q26 | 3Q25 | YOY Change |
|---|---|---|---|---|
| Vacancy Rate | 4.4% | 4.5% | 4.2% | 20 bps |
| Average Asking Rents/SF/Mo | $3.19 | $3.20 | $3.15 | 1.14% |
| Under Construction (SF) | 97,101 | 113,348 | 188,478 | -48.48% |
| Average Sales Price/SF | $327 | $571 | $637 | -48.76% |
| Average Cap Rate | 0.0% | 5.0% | 5.2% | -520 bps |
Market Breakdown — YTD Comparison
| Metric | 3Q26 | 2026 YTD | 2025 YTD | YOY Change |
|---|---|---|---|---|
| Construction Deliveries (SF) | 16,247 | 91,377 | 0 | N/A |
| Net Absorption (SF) | 69,405 | 119,549 | -93,405 | N/A |
Significant Sale Transactions 3Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| Veracom Coachworks | San Mateo | 1,014 | $12,066,000 | $11,899.41 | Prometheus Real Estate Group, Inc. | Silverstate Development Corp. |
| 369 Grand Ave | South San Francisco | 6,183 | $2,000,000 | $323.47 | Undisclosed | Richard Treglia |
| Los Metates Taqueria | South San Francisco | 1,584 | $1,050,000 | $662.88 | Chieh & Nghi Thu Ho | Vega Roberto & Veronica |
Significant Lease Transactions 3Q 2026
| Property | Submarket | SF | Transaction Date | Tenant |
|---|---|---|---|---|
| VEG Emergency Group | San Bruno/Millbrae | 9,590 | August 2026 | VEG Emergency Group |
| Laurelwood Shopping Center | San Mateo | 3,487 | September 2026 | Undisclosed |
| 55 E 4th Ave | San Mateo | 1,250 | July 2026 | ShaoYing Fu |
Significant Under Construction
| Property | Submarket | SF | Delivery |
|---|---|---|---|
| VillaSport Athletic Club | Redwood City | 97,101 | 4Q 2026 |
| Candlestick Point | Bayview/Hunters Point | 7,200 | 3Q 2029 |
Data as of Q3 2026. Source: CoStar. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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