Published on Friday, May 3, 2024
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The retail vacancy rate reached a new record of 7.9% in the first quarter.
Worsening conditions in Union Square and surrounding downtown areas drove San Francisco's retail vacancy rate to a new record high in the first quarter.
The continuing exodus of stores drove vacancies to 20.6% in Union Square in Q1, a new peak that is 510 bps higher than the rate a year ago.
Overall, the retail vacancy rate in San Francisco also hit a new record of 7.9% in the first quarter, a 120 bps increase from the previous quarter, according to a market report from Cushman & Wakefield.
San Francisco's retail vacancy rate is nearly twice as high as the national average, which dipped to 4% in April. More than 4M SF of retail space was empty in the city at the end of Q1.
Stores continued to close in the Emporium Centre San Francisco, the new name for the city's largest downtown mall. The mall, formerly known as the Westfield San Francisco Centre, was placed in receivership last year after the owners stopped making payments on a $558M loan backed by the property.
The list of stores shuttering at the mall in the first quarter included Adidas, Also, Body Shop, J. Crew, L'Occitane, Lucky Brand and Madewell.
Other notable retail closures in San Francisco in the first quarter included Lacoste at 172 Geary Street, The North Face at 180 Post Street and Jeffrey's Toys at 45 Kearny Street.
In March, Macy's announced that it will be closing its flagship store in Union Square. The 700K SF outlet at 170 Farrell Street is one of 150 underperforming stores the retailer is closing in the U.S. as it reduces its brand footprint by nearly a third and focuses on luxury brands Bloomingdales and Bluemercury.
Macy's Union Square flagship is one of the retailer's largest and oldest locations, anchoring the downtown San Francisco shopping district since it opened in 1929, when Macy's was operating under the name O'Connor, Moffat & Co. The Macy's store in Union Square is expected to remain until early next year.
Last June, Paris-based Unibail-Rodamco-Westfield and Brookfield Properties, owners of the Westfield Centre, disclosed they were handing the mall back to its lenders. A month earlier, when Nordstrom announced its plans to vacate a 300K SF store that anchored the Westfield Centre, URW issued a statement citing unsafe conditions in the downtown area.
"The closure of Nordstrom underscores the deteriorating situation in downtown San Francisco. A growing number of retailers and businesses are leaving the are due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area," URW's statement said.