October 25, 2016
By: Amber Schiada, Vice President & Director of Research, JLL
The retail sector in San Francisco seems headed to yet another level. The availability of retail space in Union Square – San Francisco’s premier shopping district – is at an all time low and rents have been headed northward at a rapid rate over the last three years. Last week, one of the Square’s longest-running retail tenants announced it would be closing. As in many other global cities which have become victims of their own success, retailers are being forced to look at new neighborhoods for opportunities to locate and grow.
Our retail research team is tracking a number of major retailers looking at locations just outside the traditional boundaries of Union Square, on the edge of the Tenderloin and even further afield. It’s a trend that didn’t just start yesterday. As far back as 2013, the Urban Land Institute was looking at this part of the city and coined the moniker, Union Square West.
Whether you call the area “Union Square West,” “Tenderloin East,” or the “Taylor Street Shopping Corridor,” doesn’t really make any difference. The fact is that more businesses – retail and otherwise – are interested in locating there. Part of the reason they are doing so, is because the neighborhood has a vitality, character and diversity that appeals to a Millennial demographic – a prime shopping audience. It’s also extremely walkable, a must for an industry that thrives on foot traffic. And, its proximity to transit, Union Square, the merging mid-Market tech corridor and downtown also boosts its appeal.
What is going to matter moving forward is how this new retail movement can be woven into the neighborhood so as to retain its essential character. A name won’t preserve the essence of the neighborhood, but the right mix of businesses will.