The following reflects San Francisco retail market conditions as of Q3 2026.
The San Francisco retail market in Q3 2026 saw vacancy and unemployment both decline year-over-year, while average asking rents continued to climb and construction deliveries slowed. Explore our full San Francisco retail market report for deeper insights into leasing activity, investment sales, and submarket performance.
Frequently Asked Questions
What is the retail vacancy rate in San Francisco in Q3 2026?
The San Francisco retail vacancy rate was 6.6% in Q3 2026, according to Kidder Mathews research. This is down 10 basis points from 6.7% a year earlier in Q3 2025, though it ticked up slightly from 6.4% in Q2 2026 (Data source: CoStar).
What are average asking rents for San Francisco retail space in Q3 2026?
Average asking rents for San Francisco retail space reached $36.56 per square foot per year in Q3 2026, according to Kidder Mathews research. That marks a 9.66% increase from $33.34 per square foot a year earlier and is up from $35.58 in the prior quarter (Data source: CoStar).
What is net absorption for San Francisco retail in Q3 2026?
Net absorption for San Francisco retail was negative 59,582 square feet in Q3 2026, meaning more retail space was vacated than leased during the quarter, according to Kidder Mathews research. Year-to-date 2026 net absorption stands at negative 92,420 square feet, compared with positive 138,823 square feet over the same period in 2025 (Data source: CoStar).
How much retail space is under construction in San Francisco?
San Francisco had 7,200 square feet of retail space under construction as of Q3 2026, according to Kidder Mathews research. That compares with zero square feet under construction in both Q2 2026 and Q3 2025 (Data source: CoStar).
What is the largest retail sale transaction in San Francisco in Q3 2026?
The largest retail sale transaction in San Francisco in Q3 2026 was 146 Geary St in Union Square, which sold for $20,500,000, or $1,581.67 per square foot, according to Kidder Mathews research. The 12,961-square-foot property was purchased by Thor 146 Geary, LLC from 146 Geary CA, LLC (Data source: CoStar).
What is the largest retail lease transaction in San Francisco in Q3 2026?
The largest retail lease transaction in San Francisco in Q3 2026 was DaVita’s 11,898-square-foot lease at Sequoia Station in Redwood City, signed in July 2026, according to Kidder Mathews research. A second large lease was also signed at Sequoia Station that month, with ROC Party leasing 10,599 square feet (Data source: CoStar).
How do San Francisco retail cap rates and sale prices compare year-over-year?
The average retail cap rate in San Francisco was 5.9% in Q3 2026, down 40 basis points from 6.3% a year earlier, according to Kidder Mathews research. Over the same period, the average sale price per square foot rose 33.21% to $571, up from $429 in Q3 2025 (Data source: CoStar).
What is the outlook for the San Francisco retail market?
The San Francisco retail market showed improving fundamentals in Q3 2026, with vacancy declining and asking rents rising even as construction activity stayed limited, according to Kidder Mathews research. Continued negative net absorption year-to-date suggests demand has not fully caught up with available space, though rising sale prices point to strengthening investor confidence (Data source: CoStar).
Last updated: Q3 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.
Q3 2026 San Francisco Retail Market: Key Data Points
Explore our full San Francisco retail market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Rate: Retail vacancy in San Francisco held at 6.6% in Q3 2026, down 10 basis points year-over-year from 6.7% in Q3 2025.
- Average Asking Rents: Average asking rents rose to $36.56/SF/yr, a 9.66% increase from $33.34/SF/yr in Q3 2025.
- Net Absorption: Net absorption was negative 59,582 SF for the quarter and negative 92,420 SF year-to-date, compared with positive 138,823 SF over the same period in 2025.
- Construction Activity: Under-construction retail space totaled 7,200 SF in Q3 2026, with zero SF of new construction deliveries for the quarter and year-to-date, versus 125,000 SF delivered year-to-date in 2025.
- Sale Pricing and Cap Rates: The average sale price reached $571/SF, up 33.21% year-over-year, while the average cap rate compressed 40 basis points to 5.9%.
- Notable Sale Activity: The largest sale of the quarter was 146 Geary St in Union Square at $20,500,000 ($1,581.67/SF), purchased by Thor 146 Geary, LLC.
- Notable Leasing Activity: Sequoia Station in Redwood City saw two significant leases signed in July 2026, including 11,898 SF to DaVita and 10,599 SF to ROC Party.
Market Breakdown — Quarterly Comparison
| Metric | 3Q26 | 2Q26 | 3Q25 | YOY Change |
|---|---|---|---|---|
| Vacancy Rate | 6.6% | 6.4% | 6.7% | -10 bps |
| Average Asking Rents/SF/Yr | $36.56 | $35.58 | $33.34 | 9.66% |
| Under Construction (SF) | 7,200 | 0 | 0 | N/A |
| Average Sales Price/SF | $571 | $483 | $429 | 33.21% |
| Average Cap Rate | 5.9% | 6.7% | 6.3% | -40 bps |
Market Breakdown — Year-to-Date Comparison
| Metric | 3Q26 | YTD 2026 | YTD 2025 | YOY Change |
|---|---|---|---|---|
| Construction Deliveries (SF) | 0 | 0 | 125,000 | N/A |
| Net Absorption (SF) | -59,582 | -92,420 | 138,823 | N/A |
Significant Sale Transactions 3Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| 146 Geary St | Union Square | 12,961 | $20,500,000 | $1,581.67 | Thor 146 Geary, LLC | 146 Geary CA, LLC |
| Veracom Coachworks | San Mateo | 1,014 | $12,066,000 | $11,899.41 | Prometheus Real Estate Group, Inc. | 715 N San Mateo, LLC |
| 600 20th St | Mission Bay/China Basin | 10,000 | $11,000,000 | $1,100.00 | Dane Reinsurance Inc | 600 20th ST, LLC |
Significant Lease Transactions 3Q 2026
| Property | Submarket | SF | Transaction Date | Tenant |
|---|---|---|---|---|
| Sequoia Station | Redwood City | 11,898 | July 2026 | DaVita |
| Sequoia Station | Redwood City | 10,599 | July 2026 | ROC Party |
| 855 El Camino Real | San Bruno/Millbrae | 9,590 | August 2026 | VEG Emergency Group |
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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