San Francisco, CA Retail Market Report Q3 2026

2019 Delivery Peak Fades 88% as Vacancy Holds at 4.6%

Demand

San Francisco posted net absorption of -110K SF in Q3 2026, against -85K SF in the same quarter last year. Vacancy is 4.6%, 4 bps tighter than Q3 2025. Treasure/Yerba Buena Island is both the tightest submarket at 0.0% vacancy and the rent growth leader at +0.7%. Trailing-12-month absorption of 147K SF is down from 183K SF a year earlier. Asking rent of $44.60/SF is up 0.3% year over year and within 1% of the Q2 2026 peak of $44.88/SF.

Supply

San Francisco delivered 16K SF in Q3 and 146K SF over the trailing twelve months (+14% versus the prior TTM period). Space under construction equals 0.1% of inventory, concentrated in Redwood City at 2.5% of its stock. Annual deliveries peaked at 1.17M SF in 2019. The 104K SF pipeline equals about three quarters of absorption at the trailing pace.

Investment Market

San Francisco recorded $0.9B in sales over the trailing twelve months, +31% against the prior TTM period; Q3 accounted for $147M. The high-water mark in this series is $1.6B in 2017.

San Francisco cap rates average 5.21%, down for 9 straight quarters. Pricing sits at $598/SF, higher for 2 consecutive years. Price per SF is 5% below the Q3 2019 peak of $627/SF.