In the eyes of the international media, San Francisco has become the poster child for “the death of urban retail.” And to be sure, the combination of crime and remote work has driven many young, affluent and highly mobile workers from Downtown San Francisco, taking a heavy toll on retail districts like Union Square. For a more wholistic summary of the momentum in the San Francisco retail market we can look to the economic rent, or average rents multiplied by the occupancy rate. Retail economic rents in Downtown San Francisco saw the largest decrease and are currently down 14% from 2019 levels.

The media’s obsessive focus on Downtown San Francisco, however, masks nuances in the broader Bay Area retail market. In many outlying San Francisco neighborhoods, such as the Mission District, economic rent is up slightly from pre-pandemic levels. Meanwhile, the recovery is even further along in San Mateo, Brisbane and other residential communities along the Peninsula. This likely reflects home-based workers spending less on Market Street and more at neighborhood cafés.

Even the often-maligned Downtown area appears to be stabilizing, with economic rent up 26% from the early 2022 trough. Perhaps the recently opened Ikea store in Union Square is a harbinger of better times ahead.