San Francisco Retail Market Report

The following reflects San Francisco retail market conditions as of Q2 2026.

The San Francisco retail market in 2Q 2026 showed continued improvement, with vacancy rates declining, asking rents increasing, and net absorption posting strong year-over-year gains. Limited new supply continues to support market fundamentals, while retail investment pricing moved higher as investor confidence improved. Explore our full San Francisco retail market report for detailed insights into leasing activity, investment trends, and market performance.

Frequently Asked Questions

What is the retail vacancy rate in San Francisco in Q2 2026?

San Francisco’s retail vacancy rate was 5.6% in Q2 2026, according to Kidder Mathews research. This was down from 6.0% in Q1 2026 and down 90 basis points from 6.5% in Q2 2025, marking a fourth consecutive period of improvement in market fundamentals.

How much have retail asking rents grown in San Francisco?

Average retail asking rents in San Francisco reached $35.34 per square foot per year in Q2 2026, up 5.59% year-over-year from $33.47 PSF in Q2 2025 (Data source: CoStar). Rents also rose from $35.61 PSF in Q1 2026, reflecting steady upward pressure across the market.

What is driving net absorption growth in the San Francisco retail market?

Year-to-date net absorption in San Francisco retail totaled 301,343 SF through Q2 2026, a 65.59% increase over the 181,983 SF absorbed during the same period in 2025, according to Kidder Mathews research. Second-quarter absorption alone was 201,734 SF, indicating that limited new supply combined with steady tenant demand is tightening available space.

How much retail space is under construction in San Francisco?

There was 0 SF of retail space under construction in San Francisco as of Q2 2026 (Data source: CoStar). The development pipeline has remained empty across the past three reported quarters, reflecting an exceptionally constrained supply environment.

Were there any retail construction deliveries in San Francisco in 2026?

No retail construction deliveries were recorded in San Francisco through the first half of 2026, compared with 125,000 SF delivered over the same period in 2025, according to Kidder Mathews research. This drop-off in new supply is a key factor supporting the market’s declining vacancy rate.

What is the average retail sale price per square foot in San Francisco?

The average retail sale price in San Francisco was $495 per square foot in Q2 2026, up 5.96% year-over-year from $468 PSF in Q2 2025 (Data source: CoStar). Pricing also increased from $390 PSF in Q1 2026.

How are retail cap rates trending in San Francisco?

The average retail cap rate in San Francisco compressed to 6.3% in Q2 2026, down 50 basis points from 6.8% in Q2 2025, according to Kidder Mathews research. Cap rates ticked up slightly from 6.2% in Q1 2026, but remain below year-ago levels as investor confidence in the sector improves.

What was the largest retail sale transaction in San Francisco in Q2 2026?

The largest retail sale transaction in San Francisco in Q2 2026 was Ghirardelli Square – Building A in the Waterfront/North Beach submarket, which sold for $41,963,183 ($3,559.22 per square foot) (Data source: CoStar). The 11,790-square-foot property was purchased by 1823 Partners | Embrace Real Estate from Jamestown LP.

What was the largest retail lease transaction in San Francisco in Q2 2026?

The largest retail lease transaction in San Francisco in Q2 2026 was Dollar Tree’s 47,331-square-foot lease at Linda Mar Shopping Center in the Peninsula Coastline submarket, signed in May 2026, according to Kidder Mathews research. Other notable leases included Maze at Chase Center in Mission Bay/China Basin and Bar Esper at Vignette Collection on San Francisco Market St, both signed in April 2026.

What is the outlook for the San Francisco retail market in 2026?

The San Francisco retail market is expected to continue tightening through 2026, with vacancy declining, rents rising, and net absorption outpacing 2025 levels, according to Kidder Mathews research. With no new construction underway or delivered so far this year, limited supply is likely to keep supporting landlord-favorable conditions and rising sale pricing.

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

2Q 2026 San Francisco Retail Market: Key Data Points

• Vacancy Rate Declines: San Francisco’s retail vacancy rate fell to 5.6% in 2Q 2026, improving 90 basis points year-over-year.
• Asking Rents Continue to Rise: Average asking rents reached $35.34 PSF per year, representing a 5.6% increase year-over-year.
• No New Construction Underway: The market reported 0 SF under construction in 2Q 2026, reflecting an exceptionally limited development pipeline.
• Sale Prices Move Higher: The average retail sale price increased to $495 PSF, a 6.0% increase year-over-year.
• Net Absorption Strengthens: Year-to-date net absorption totaled 301,343 SF, a 65.6% increase from 2025, indicating strengthening tenant demand.
• Supply Remains Constrained: The market recorded no construction deliveries in 2026 year-to-date, compared with 125,000 SF delivered during the same period last year.

Market Breakdown — Quarterly Comparison

Market Breakdown — Year-to-Date Comparison

Significant Sale Transactions 2Q 2026

Significant Lease Transactions 2Q 2026

Significant Under Construction