— By Kazuko Morgan, executive vice chair; Alanna Joy Loeffler, managing director, business strategy and development, Americas retail services; and Soany Gunawan, senior research analyst, San Francisco retail research, Cushman & Wakefield —
Over the past few years, the headline narrative surrounding San Francisco has focused on store closures, complex governance issues and city challenges. However, with one of the highest U.S. household incomes, a rising population count and the lowest unemployment rate in California, the city remains a beacon of opportunity, innovation and creativity. Within the urban retail market, San Francisco continues to demonstrate resilience and growth with a host of new brands, products and services arriving and thriving.
Retail sales in San Francisco have continued to increase, climbing an estimated 5.7 percent year over year to $37.1 billion in the second quarter of 2024. A multitude of exciting brands and new concepts are opening, flourishing or expanding. INGKA has launched its first-ever food hall, Saluhall, a 23,000-square-foot, plant-forward culinary project connected to the IKEA store at 945 Market Street. This addition not only creates jobs but enriches the community with regular events, highlighting local food vendors while offering fun and educational cooking classes. MillerKnoll’s modern furnishings brand Design Within Reach recently relocated its flagship store to a 1920s-era warehouse in the Design district. The new space offers a more experiential retail setting and a unique showroom atmosphere.
The overall vacancy rate in Union Square reached a new peak of 21.7 percent in the second quarter of 2024. Despite the increase in vacancy, Union Square is seeing a flurry of activity as global luxury watch brands like Breitling, Rolex, Patek Phillippe, A. Lange Sohne and Omega have either opened or announced new store openings.
Meanwhile, luxury houses like St. John, Bvlgari, Burberry, Brunello Cucinelli, MaxMara and Bottega Veneta have expanded or increased their presence in the area, signaling a continued commitment to the shopping district. In addition, Nintendo will open its second U.S. location here in 2025.
The culinary industry is also keeping things fresh. Stand-out additions like Chotto Matte at the rooftop of 100 Stockton Street offer a unique Japanese-Peruvian fusion, while Holbrook House at the Conservatory at One Sansome brings elevated California cuisine and cocktails to the area. Other recent openings include two Miller & Lux Provisions cafés by celebrity chef Tyler Florence at Union Square Plaza and Starlite, a revival of the former Harry Denton’s Starlight Room atop the Beacon Grand Hotel at 450 Powell Street.
To draw people together, the city recently launched Downtown First Thursdays (DFT), an all-ages monthly street party every first Thursday evening of the month. It features disco in the streets, DJs, live music, drag, fashion, street performances and more.
Looking ahead, tourism is expected to continue its positive momentum as San Francisco gears up to host major events like the NBA All-Star Game next February and the Super Bowl in 2026. These events are anticipated to draw large crowds, providing a substantial boost to the local economy and retail sector with increased spending in hotels, restaurants and retail stores. We will also see the WNBA coming to the Bay Area with the Golden State Valkyries’ inaugural season tipping off in May 2025.
San Francisco has become the capital of the AI (artificial intelligence) revolution and continues to attract tech talent. Venture capital funding into start-up companies headquartered in the city remained at a healthy level in the second quarter, with capital investment totaling $5.5 billion. Companies within the generative AI and machine learning funding in San Francisco gathered the most funding over the past six quarters, with the figure for the second quarter of 2024 at 47.2 percent.
Like many other urban markets, San Francisco continues to work through various unique economic challenges that have developed since the beginning of the pandemic. However, the city’s unique blend of cultural richness and entrepreneurial spirit fosters an environment where businesses can thrive. This dynamic atmosphere continues to attract both established brands and new ventures, driving the city’s continued growth and promising future.