California

Northern California’s retail real estate market is undergoing somewhat of a seismic shift. Traditional shopping centers, such as Serramonte Mall in Daly City and Hillsdale Mall in San Mateo, are seeing name-brand retailers like Payless Shoesource, Gymboree and Charlotte Russe closing stores. This has dictated a recalibration in leasing strategy. , These “prime” retail spaces are often successfully backfilled by business and lifestyle tenants like professional service firms, fitness centers, coffee shops, restaurants and entertainment centers  —  the sort of businesses that can regain foot traffic. This trend toward more lifestyle and entertainment tenants  —  often called experiential retail  —  can also be seen in the region’s vibrant market for new mixed-use developments. Multifamily communities in San Francisco, Cupertino, Santa Clara and Oakland will be delivered in the coming months. Many of these projects are urban infill, transit-oriented developments, which naturally offer strong street-level retail locations. In this setting, experiential retail works well for apartment residents and local foot traffic. Nearly 6 million square feet of new office has been proposed in downtown San Jose, which is driving strong retail interest from new restaurants and service retail. Vacancy rates for retail properties throughout the Bay Area have ticked up slightly, …