Silicon Valley Retail Market Report

The following reflects Silicon Valley retail market conditions as of Q2 2026.

The Silicon Valley retail market strengthened in 2Q 2026, with vacancy declining sharply, asking rents increasing, and net absorption remaining positive. Investment activity also improved as average sales prices rose year-over-year, while new construction remained limited, supporting tight market fundamentals. Explore our full Silicon Valley retail market review for detailed insights into leasing, investment, and development trends.

Frequently Asked Questions

What is the current retail vacancy rate in Silicon Valley for Q2 2026?

Silicon Valley’s retail vacancy rate stood at 3.0% in Q2 2026, down from 3.7% in the prior quarter and 4.1% one year earlier, a 110-basis-point year-over-year decline (Data source: CoStar). The decline reflects continued demand for retail space across the market, according to Kidder Mathews research.

What are average retail asking rents in Silicon Valley in Q2 2026?

Average retail asking rents in Silicon Valley reached $3.14 per square foot annually in Q2 2026, up from $3.12 in the prior quarter and $3.05 one year earlier, a 3.09% year-over-year increase (Data source: CoStar).

How much net absorption did the Silicon Valley retail market record in Q2 2026?

Net absorption totaled 523,941 SF in Q2 2026 alone, according to Kidder Mathews research, bringing year-to-date net absorption to 654,771 SF. Net absorption measures the change in occupied retail space, and this figure marks a significant improvement from the 231,288 SF of negative absorption recorded during the same period in 2025 (Data source: CoStar).

What is the construction pipeline for Silicon Valley retail properties in Q2 2026?

No retail space was actively under construction in Silicon Valley at the end of Q2 2026, down from 50,000 SF under construction in the prior quarter and 145,285 SF one year earlier (Data source: CoStar). Construction deliveries totaled 50,000 SF during the quarter, bringing year-to-date deliveries to 60,285 SF, up 64.09% from the 36,739 SF delivered over the same period in 2025.

What was the largest retail sale transaction in Silicon Valley in Q2 2026?

The largest retail sale in Silicon Valley in Q2 2026 was Cupertino Crossroads Shop in Cupertino, a 21,668-square-foot property that sold for $12,231,557, or $564.50 per square foot, according to Kidder Mathews research. Summerhill Stevens Creek, LLC purchased the property from Byer Properties, LP.

What was the largest retail lease transaction in Silicon Valley in Q2 2026?

The largest retail lease signed in Silicon Valley in Q2 2026 was Chase’s 5,358-square-foot lease at 2060 Bascom Ave in Campbell, completed in June 2026 (Data source: CoStar). Other notable leases included Habibiz, Inc’s 4,435-square-foot lease at 262 Santa Clara St in Downtown San Jose and Hiroko Sushi’s 3,622-square-foot lease at Main Street Cupertino, both signed in April 2026.

What are average retail cap rates in Silicon Valley in Q2 2026?

Average retail cap rates in Silicon Valley rose to 6.2% in Q2 2026, up from 6.5% in the prior quarter and up 120 basis points from 5.0% one year earlier, according to Kidder Mathews research.

What is the average retail sales price per square foot in Silicon Valley?

The average retail sales price in Silicon Valley reached $480 per square foot in Q2 2026, up from $477 in the prior quarter and an 18.32% increase from $406 one year earlier (Data source: CoStar), reflecting continued investor interest in Silicon Valley retail assets.

Which Silicon Valley submarkets saw notable retail leasing and sales activity in Q2 2026?

Cupertino recorded significant activity in Q2 2026, home to both the largest sale transaction (Cupertino Crossroads Shop) and a notable lease at Main Street Cupertino, according to Kidder Mathews research. Other active submarkets included Mountain View and South San Jose for sales, and Campbell and Downtown San Jose for leasing.

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

The Silicon Valley retail market is expected to remain tight heading into the second half of 2026, supported by declining vacancy, rising asking rents, and limited new construction, according to Kidder Mathews research. Continued positive net absorption and rising sales prices point to sustained tenant and investor demand for retail space in the market.

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

2Q 2026 Silicon Valley Retail Market: Key Data Points

• Vacancy Rate Declines: Silicon Valley’s retail vacancy rate fell to 3.0% in 2Q 2026, a 110-basis-point decrease from 4.1% one year earlier.
• Average Asking Rents Increase: Average asking rents reached $3.14 PSF annually, up 3.1% year-over-year, reflecting continued demand for retail space.
• Net Absorption Remains Strong: Net absorption totaled 654,771 SF year-to-date, a significant improvement from the 231,288 SF loss recorded during the same period in 2025.
• Construction Pipeline Remains Limited: No retail space was actively under construction at the end of 2Q 2026, while year-to-date deliveries totaled 60,285 SF.
• Sales Prices Climb: The average retail sales price increased to $480 PSF, an 18.3% gain year-over-year, highlighting continued investor interest in Silicon Valley retail assets.
• Cap Rates Move Higher: Average cap rates rose to 6.2%, up 120 basis points from one year ago as investors adjusted to changing market conditions.

Market Breakdown — Quarterly Comparison

Market Breakdown — Year-to-Date

Significant Sale Transactions 2Q 2026

Significant Lease Transactions 2Q 2026