SF Retail Market Q1 2021 by Compass Marin

Retail Market Report

San Francisco - CA

PREPARED BY

Roark O'Neill Real Estate Agent

San Francisco Retail

RETAIL MARKET REPORT

Market Key Statistics

Leasing

Rent

Construction

Under Construction Properties

Sales

Sales Past 12 Months

Economy

Market Submarkets

Supply & Demand Trends

Rent & Vacancy

Sale Trends

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Overview San Francisco Retail 12 Mo Deliveries in SF

12 Mo Net Absorption in SF

Vacancy Rate

12 Mo Rent Growth

53.1 K

(1.1 M)

4.8%

-3.8%

California lifted stay-at-home orders at the end of January and reopening the economy will no longer be based on ICU availability. Indoor retail businesses will be allowed to open at 25% capacity, and businesses with outdoor operations can resume. Common areas and food courts will remain closed at shopping centers and malls. Personal care service businesses, including nail and hair salons, are also set to reopen if in compliance with local health guidelines. Yelp data shows that thousands of businesses temporarily closed in San Francisco during previous shutdowns, and more than 25% ended up permanently closed. This past trend does not bode well for retail tenants and landlords in the near term, but businesses that survive could see a vastly improved economy by 2022. Until then, many retailers will deal with slower foot traffic, lower consumer sentiment, lost wages, and constrained consumer spending activity. Retail occupancy declined for the fourth consecutive year in 2020 with move-outs coming from underperforming big box stores and small businesses. Leasing activity was muted after the initial outbreak and was about 50% of pre-covid levels. Brick and mortar retailers were already weathering a slew of headwinds before the pandemic, and the temporary closing of shopping malls, indoor shopping, and entertainment venues adds more uncertainty for landlords, tenants, investors, and lenders alike. Mall owners were already busy redesigning, and releasing spaces abandoned by struggling tenants. Big box retailers including Macy's, Nordstrom, and Kmart have shed large blocks of space and closed stores in San Francisco. Store closings have amplified amid the pandemic, particularly among smaller retailers short on cash reserves. The California Restaurant Association stated that 30,000 restaurants in the state could close permanently due to social distancing measures that have shuttered dining rooms and led to widespread layoffs. Prior to the coronavirus, retailers including San Francisco-based Gap, JCPenny, Forever 21, and Victoria's Secret announced nationwide store closings, which will impact fundamentals for several more years to come. The December 2018 closure of luxury retailer

Gumps, San Francisco's oldest department store, was emblematic of the pre-covid environment. Shopping malls and power centers, in particular, have been hit hardest in the “retail apocalypse” playing out across the nation. Vacancy within San Francisco's power centers has jumped up higher, to 8.7%, while mall vacancy has climbed to 13.8%, matching highs last seen in the economic recession. Space availability rates in malls are even higher at 8.8%. San Francisco holds very few traditional shopping malls for a major city, which perhaps has helped guard against an even stronger decline in occupancy. Westfield San Francisco Centre, on Market Street, and Stonestown Galleria, on the residential Westside, are the city's only two regional malls, and three malls serve residents in San Mateo County south of the city: Serramonte Center, The Shops at Tanforan, and Hillsdale Mall. Supply growth over the past decade has been measured, and active construction levels in the market are not overwhelmingly high. Major development should remain on hold in the foreseeable future, as a recently delivered mall in the city's center has struggled with leasing, and plans for an outlet mall on Candlestick Point were scrapped. Recent demand has been generated by experimental retail stores, small-footprint fitness centers, the expansion of click-to-bricks retailers like Amazon Go, and omnichannel supermarkets led by Whole Foods. Upscale bistros and electronically enabled lunch eateries with a focus on local, fresh ingredients were opening as newcomers took their shot at success in the country's densest city for restaurants, but the coronavirus shutdown and social distancing measures will undoubtedly scare many restauranteurs from opening in 2020. Beyond new social distancing measures, high rents, expensive build-out costs, and lengthy delays in permitting prevent aspiring restaurateurs and retailers from opening new locations in San Francisco. Margins were already razor-thin, as the costs of goods and labor rose rapidly in the expansion period. In response to the volatile and risky retail landscape, pop-ups, short-term leases, and smaller spaces have been in vogue as tenants aim for profitability in a challenging landscape.

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Overview San Francisco Retail Some available retail spaces, particularly on rough stretches Mid-Market and in the Waterfront/North Beach Submarket, are sitting vacant for years. This phenomenon has prompted San Francisco's board of supervisors to enact an ordinance requiring owners of vacant storefronts, even those offered for lease or sale, to register their properties and pay an annual fee of $711. In addition, supervisor Aaron Peskin's proposal to tax owners of storefronts in 12 newly established Neighborhood Commercial Districts that sit vacant for six months or longer $250/day was passed by voters in the March 2020 ballot, although its implementation will be delayed due to the pandemic. The new vacancy tax is aimed at revitalizing the city's unused retail space but does not necessarily address the myriad of costs preventing new store and restaurant openings. It's unknown if landlords will lower asking rents in response, or if doing so will help fill vacant spaces, particularly in today's new environment Same-store rent growth in the market had already fallen

to negligible levels prior to the coronavirus pandemic, and rents are declining now as landlords are adjusting to weakening demand. Annual rent growth in the expansion cycle peaked at a robust 6.2% in 2015 but fell below the national average in 2017. Upheaval and transition of the market's tenant base generated some unique acquisition and redevelopment opportunities in recent years. Sales volume hit a record level in 2019 and remained elevated in 20Q1 as deals negotiated before the pandemic were closed, but did fall noticeably for the rest of 2020. Despite a slowdown in tenant demand and a consistent slowdown in rent growth over the past four years, average pricing in the market has remained rather resilient. The tech industry powered strong local population and income growth in the 2010's expansion cycle, which in turn, attracted investors even at low yields. But. investor sentiment, lender financing appetites, and credit flows will grow increasingly strained as retail properties bear the brunt of the coronavirus crisis.

KEY INDICATORS RBA

Vacancy Rate

Market Rent

Availability Rate

Net Absorption SF

Deliveries SF

Under Construction

Malls

5,080,968

13.8%

$47.31

8.8%

(250,223)

263,640

Power Center

2,282,725

8.7%

$43.01

8.9%

10,493

Neighborhood Center

7,649,487

6.7%

$43.49

7.6%

(5,158)

Strip Center

1,826,960

3.0%

$35.63

3.4%

(6,493)

General Retail

63,985,001

3.8%

$41.91

4.5%

(72,524)

14,147

Other

1,093,302

3.7%

$127.73

3.9%

Market

81,918,443

4.8%

$43.45

5.2%

(323,905)

277,787

12 Month

Historical Average

Forecast Average

Peak

When

Trough

When

Current Quarter

Annual Trends

Vacancy Change (YOY)

1.3%

3.2%

4.9%

5.6%

2006 Q2

2.1%

2016 Q2

Net Absorption SF

(1.1 M)

99,987

(110,061)

2,107,376

2007 Q3

(956,762)

2020 Q3

Deliveries SF

53.1 K

236,329

174,645

851,773

2007 Q2

16,713

2013 Q1

Rent Growth

-3.8%

2.1%

6.2%

2015 Q1

-4.1%

2021 Q1

Sales Volume

$695 M

$703.3M

N/A

$1.4B

2019 Q4

$176.8M

2009 Q3

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Leasing San Francisco Retail San Francisco's retail market has weakened for years as brick and mortar tenants struggled with e-commerce and rising business costs, and now the coronavirus pandemic presents an unprecedented disruption. Net absorption in the market turned negative in 2018 and 2019, with occupancy losses only hastening in 2020. In the wake of San Francisco's economic shutdown and relatively strict social distancing policies, many restaurants, gyms, and entertainment venues are going out of business permanently, in addition to the mix of storefront and mall retailers who were already closing doors. Yelp reported that more than 5,000 businesses have closed while complying with shutdowns (about 40% of which turned into permanent closures) with the SFOakland metro suffering one of the highest rates of closures across the country. Many restaurants have closed doors. Mom and pop retailers without capital reserves have struggled to stay afloat through the coronavirus pandemic. Since 2018, over 2 million SF of retail space across the metro has been vacated in aggregate. Vacancy in the market has doubled from economic expansion-era lows and is climbing higher at a brisk pace. The vacancy rate is up from a historic bottom of 2.1% reached in 2015, to 4.8% today and is likely to rise higher in the year to come. Malls and power centers, in particular, were struggling prior to the coronavirus outbreak. Vacancy within San Francisco's power centers has jumped to 8.7%, while mall vacancy has climbed to 13.8%, far ahead of the other retail subtypes. Vacancy within these sectors has risen to highs last seen at the peak of the great recession in 2007. Big-box retailers have shed space as the consumer's preference for online shopping grows. Neighborhood center vacancy is up to 6.7% Conversely, vacancy among strip centers remains at a historic low of 3.0%, but this outperforming segment has been hit hard in the coronavirus shutdown. Nonessential businesses with lost income streams have requested rent forbearance from property owners. Many retailers were already struggling to keep up with rent and payroll as sales flagged. Macy's sold their Union Square men's store building at 100 Stockton St. in 2017, to Morgan Stanley and local retail developer Blatteis Realty Company. Led by Gensler, the redeveloped eightstory property will feature flagship retail, art galleries, artisanal food, premium dining venues, and creative

office space. Macy's vacated the nearly 264,000-SF building in 2018, which is expected to be ready for new tenants by the close of 2020. Large department stores like the former Macy's in Union Square and Stonestown Galleria are being transformed into mixed-use centers, with a broader array of smaller retailers, dining, and entertainment options. In addition, under-utilized retail sites throughout the metro have been demolished, making way for the development of higher-income properties. The 6x6 mall, a 250,000-SF, six-story enclosed building on Sixth Street was sold to Ikea's Ingka Centres in 2020. The glass exterior building is located a half-block from Westfield's San Francisco Centre on Market Street and has remained vacant, seeking an anchor tenant since completion in 2017. Converting space into office use is a rising trend in the market, as landlords are repositioning retail assets to better suit evolving consumer trends. Even the Westfield mall has plans to convert 50,000 SF on its seventh and eighth floors into offices in part of its larger renovation. While vacancies are clearly on the rise overall, San Francisco still boasts comparatively strong fundamentals. Among the country's 20 largest retail markets, San Francisco maintains the third-lowest vacancy rate according to CoStar research. Southern California retail markets have experienced more severe store closures and occupancy losses over the past year. Only Boston and Seattle, other supply-constrained markets, maintain a tighter overall vacancy rate. Retail fundamentals are faring better in San Francisco than in many markets around the country for several reasons. The development of retail space over the past decade has been measured, and offset by the demolition of obsolete properties, so overall inventory supply growth has been negligible. Meanwhile, demand has been at least been aided by the metro's economic strength. Population growth in the 2010s economic expansion led to an increase in density, while income growth has provided an expanding consumer base with greater purchasing power. Also at Stonestown Galleria, an expanded Target store opened doors in 20Q2. Target established a 32,000 SF store at Stonestown back in 2017, and recently expanded into some of Nordstrom's old space, tripling its footprint. Target first entered the city in 2012, and has

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Leasing San Francisco Retail found success with both large and small-format stores. Moving forward, vacancy continues to rise in CoStar's forecast as a result of the market's devastating economic shutdown and limitations on commerce. Supply growth will primarily stem from the re-configured former Macy's Stonestown Gallery space that as mentioned has been

fully preleased, as well as the former Macy's owned 100 Stockton St. building, which now has 5 floors available for retailers and 2 upper floors available as office space. The combination of supply growth and occupancy losses compound in the forecast and yield a vacancy rate that coincides with the national trend line.

NET ABSORPTION, NET DELIVERIES & VACANCY

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Leasing San Francisco Retail VACANCY RATE

AVAILABILITY RATE

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Leasing San Francisco Retail 12 MONTH NET ABSORPTION SF IN SELECTED BUILDINGS

Net Absorption SF Building Name/Address

Submarket

Bldg SF

Vacant SF 1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

12 Month

Stonestown Galleria

Southern City

160,505

102,633

57,867

Gateway of Pacific

South San Francisco

50,000

Veterans Square

Redwood City

107,278

30,345

Transbay Transit Center

South Financial District

98,330

18,523

28,015

The Bazaar on Nob Hill

Van Ness/Chinatown

13,830

The Cove at Oyster Point

South San Francisco

15,870

2,541

13,329

2406 El Camino Real

Redwood City

12,000

Peninsula Boardwalk

Redwood City

99,922

11,358

Westlake Shopping Center

Brisbane/Daly City

62,088

2,014

11,018

532 Sutter St

Union Square

16,596

9,720

740 Washington St

Van Ness/Chinatown

13,600

9,536

1412-1414 Van Ness Ave

Van Ness/Chinatown

31,000

9,500

1500 Collins Ave

Brisbane/Daly City

16,000

9,422

The City Center

West of Van Ness

22,702

22,072

9,074

6X6

MidMarket

255,765

198,425

7,944

Menlo Square

Menlo Park

7,463

Third Avenue Center

San Mateo

50,000

38,300

7,383

Subtotal Primary Competitors

1,032,949

362,436

22,072

297,804

Remaining San Francisco Market

80,950,221

3,582,929

(345,977)

(1,353,359)

Total San Francisco Market

81,983,170

3,945,365

(323,905)

(1,055,555)

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Leasing San Francisco Retail TOP RETAIL LEASES PAST 12 MONTHS Building Name/Address

Submarket

Leased SF

1355-1395 Van Ness Ave

Van Ness/Chinatown

Q1 21 -

Cushman & Wakefield

San Francisco Design Center

Showplace Square

25,000

Q1 20 Samsara

1500 Collins Ave

Brisbane/Daly City

16,000

Q3 20 Tesla

Colliers International

928 Whipple Ave

Redwood City

14,700

Q1 21 -

KW Commercial

140 Geary St

Union Square

14,116

Q4 20 -

Cushman & Wakefield Cushman & Wakefield

Merril's

MidMarket

13,000

Q4 20 Bait, Inc.

Compass Commercial

100 El Camino Real *

Belmont/San Carlos

12,402

Q3 20 Planet Granite

The Bazaar on Nob Hill

Van Ness/Chinatown

11,912

Q1 20 WOW! Kid's Playground

San Bruno Towne Center *

San Bruno/Millbrae

9,000

Q1 21 Chuck E. Cheese

The Berube Company,…

2360-2366 Mission St

Mission

9,000

Q1 21 -

Intero Real Estate Serv…

Yotel San Francisco

San Francisco Market St…

7,826

Q4 20 -

CBRE

280 Metro Center

Brisbane/Daly City

7,500

Q2 20 Spirit of Halloween

Kimco Realty Corpor… Kimco Realty Corporati…

1294 Burlingame Ave

Burlingame

6,860

Q1 21 -

COMPASS

1700 Fillmore St

West of Van Ness

6,659

Q1 21 -

Maven Commercial, Inc.

1208 Donnelly Ave

Burlingame

6,370

Q1 21 Anthem Interiors

Capital Realty Group, Inc.

Bay Meadows

Hillsdale

6,000

Q2 20 -

Retail West

315 Main St

Peninsula Coastline

6,000

Q2 20 Fattoria e Mare

CBRE;Robert Mascall…

466-478 Green St

Waterfront/North Beach

5,978

Q3 20 American Bites

Maven Commercial, Inc.

559-567 Sutter St

Union Square

5,916

Q3 20 -

Chad Mitchell Associat…

2205 Middlefield Rd *

Redwood City

5,750

Q1 20 Estrellita Market

DaVita/Dunn Edwards Building *

Brisbane/Daly City

5,677

Q2 20 Dunn-Edwards Paints

Westlake Shopping Center

Brisbane/Daly City

5,600

Q1 20 National Asian American…

Kimco Realty Corporation

Menlo Square

Menlo Park

5,488

Q1 20 -

Colliers International

1500 Mission St

MidMarket

5,424

Q1 20 -

JLL

1429 San Mateo Ave

South San Francisco

5,000

Q1 21 -

Coldwell Banker Comm…

355 11th St

South of Market

4,959

Q4 20 -

Maven Commercial, Inc.

The Mills Bldg *

Financial District

4,879

Q4 20 illy Caffè

Avison Young

L Seven

SoMa

4,749

Q1 20 -

JLL

4th Ave & Geary Farmers Market

West of Van Ness

4,500

Q3 20 Abraham Farmers Market

COMPASS

Pine Street Center

Financial District

4,426

Q2 20 California Bank and Trust

Hughes Marino

CBRE

Peninsula Boardwalk

Redwood City

4,292

Q2 20 -

Crosspoint Realty

1157 Folsom St

South of Market

4,125

Q4 20 -

CIG Corp.

601-625 Grant Ave

Van Ness/Chinatown

4,067

Q1 20 -

Maven Commercial, Inc.

1600-1610 Polk St

Van Ness/Chinatown

4,000

Q3 20 -

Vanguard Properties

Showplace East

Showplace Square

3,852

Q2 20 -

Showplace East

Showplace Square

3,850

Q1 20 Paris Tile and Ceramics

Ground Matrix

1098 Sutter St

Van Ness/Chinatown

3,840

Q1 20 Halal Dastarkhan

Avison Young

One Post

Financial District

3,759

Q1 21 -

CBRE

268 O'Farrell St

Union Square

3,755

Q2 20 -

Handlery Hotels, Inc.

National Center Bldg

Union Square

3,496

Q1 20 -

Cushman & Wakefield

200,000

Qtr Tenant Name

Tenant Rep Company Leasing Rep Company

*Renewal

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Rent San Francisco Retail Rent growth in San Francisco's retail market decelerated from 2015 through 2019 as tenant demand weakened, and rent losses are now occurring in an environment where retail sales have dropped and many retailers are forced to permanently shutter. Leasing activity has plunged and may remain subdued for some time as retailers will be tentative to open new spaces, given the uncertain outlook for economic recovery and a return to relatively normal social interactions and commercial consumption levels. Asking rents are heading lower as social distancing measures curtail retail sales in San Francisco sharply. On a trailing year basis, the market's same-store asking rent average has declined by -3.8%. Weighted-average asking rents have declined rapidly since 19Q4, as vacancy continues to mount, and social distancing

measures curtail leasing demand and store openings. Rent growth peaked above 5% in 2015, notching the strongest gains across the nation, so the downturn into negative territory over the past year has been precipitous. Landlords are quickly adjusting to weaker leasing prospects but have yet to cut asking rents substantially across the board. Overall market rent levels average $43.43/SF/NNN. That ranks the San Francisco metro as one of the most expensive markets in the country, following Honolulu and New York, and just ahead of San Jose. That said, rents in Manhattan are far higher than in San Francisco's most expensive submarkets, Waterfront/North Beach, the Financial District, Union Square, and Yerba Buena.

MARKET RENT GROWTH (YOY)

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Rent San Francisco Retail MARKET RENT PER SQUARE FEET

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Construction San Francisco Retail Retail development in San Francisco is notoriously limited. Only a handful of properties, primarily renovation projects, totaling approximately 280,000 SF are under construction. Large department stores in Union Square and Stonestown Galleria are being transformed into mixeduse centers, with a broader array of smaller retailers, dining, and entertainment options, which will provide for some inventory growth moving forward. Stonestown Galleria's redevelopment will be anchored by Whole Foods, and the mall recently opened an expanded Target store. At the former Macy's owned 100 Stockton St. redevelopment project, 5 floors are available for retailers and 2 upper floors are available for office tenants. No

other significant retail properties are under construction. For a city the size of San Francisco, relatively little new retail space has been developed over the past decade, coinciding with strong economic gains. In terms of inventory under construction as a percentage of existing inventory, San Francisco ranks towards the bottom of the country. No noteworthy retail construction projects have broken ground since early 2019. Candlestick Point developer Five Point officially pivoted away from building a $1 billion dollar outlet mall in early 2019, terminating their deal with Macerich, and instead of preparing to redevelop the site for office and research use. Five Point initially suspended the development of the mall in 2017, due to the rapidly evolving retail landscape.

DELIVERIES & DEMOLITIONS

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Construction San Francisco Retail SUBMARKET CONSTRUCTION Under Construction Inventory No.

Submarket

Average Building Size

Bldgs

SF (000)

Pre-Leased SF (000)

Pre-Leased %

Rank

All Existing

Under Constr

Rank

Union Square

264

14.7%

20,815

263,640

Redwood City

8,176

8,376

Mission/Potrero

100%

6,784

5,771

Bayview/Hunters Point

5,578

Belmont/San Carlos

6,299

Brisbane/Daly City

12,131

Burlingame

8,708

Civic Center

7,827

Financial District

9,581

Foster City/Redwood Shrs

21,815

All Other

7,379

278

16.0%

7,780

92,596

Totals

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Under Construction Properties San Francisco Retail Properties

Square Feet

Percent of Inventory

Preleased

505,423

0.6%

53.8%

UNDER CONSTRUCTION PROPERTIES

UNDER CONSTRUCTION Property Name/Address

1 2 3 4 5

100 Stockton St Whole Foods/Sports Bas… 3251 20th Ave 925 Main St 200 Linden Ave Mission Kids Co-op 969 Treat Ave

Rating

Bldg SF

Stories

Start

Complete

263,640

Jan 2019

Jul 2021

221,433

Aug 2018

Apr 2021

8,376

Dec 2018

Mar 2021

6,203

Nov 2018

Jun 2021

5,771

Jun 2019

Sep 2021

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Developer/Owner

Morgan Stanley Services Group I… Brookfield Properties Retail Group Brookfield Property REIT Inc. Tim & Denise Rust Tim & Denise Rust Omni Investment Group Mission Kids Co-Op Mission Kids Co-Op

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Sales San Francisco Retail San Francisco's retail sales market remained strong through the 2010's expansion and led to some unique acquisition and redevelopment opportunities. The trend of repurposing underperforming malls has likely been accelerated by the pandemic and business shutdowns. Sales volume slowed dramatically in 2020 as uncertainty weighed on investors and lenders, with annual sales volume about half that of 2019. Investors still see opportunities in assets that could benefit from repositioning. In November, Presidio Bay Ventures and Kinship Capital acquired an auto dealership from a private individual for about $37 million ($300/SF). The joint venture plans to redevelop the property into a 123,000 SF, Class A life science building that could break ground by the end of 2021. The auto dealership plans to relocate to another site. Even in the pandemic, some noteworthy deals have closed. Roughly one year after initially purchasing a brand-new building from its developer, local investment firm TMG Partners and Alexandria Real Estate Equities sold the vacant 6x6 mall on Market St. to Ingka Centres,

the real estate arm of Ikea. The sellers acquired the mall for $179 million in 2019 and sold it a year later for $198 million, or $774/SF. The developer, Dallas-based Cypress Equities, completed the project in 2017 and had repositioned some of its space for office use, but the building remained vacant and available until the Ingka Centre's purchase. The average market price in San Francisco is currently over $640/SF, well above its pre-2010 peak and among the highest in the nation. However, average pricing across the metro, based on the estimated value of all properties in the market, is trending lower as cap rates inch upwards and rents face downward pressure. The market's average cap rate of 4.5% ranks as one of the lowest in the country and has not budged materially higher, despite weaker fundamentals and the deterioration of rent growth. Investors will need to reassess their projections for future cash flows and property performance, as the coronavirus recession still dampers the near term outlook for underwriting assumptions.

SALES VOLUME & MARKET SALE PRICE PER SF

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Sales San Francisco Retail MARKET CAP RATE

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Sales Past 12 Months San Francisco Retail Sale Comparables

Avg. Cap Rate

Avg. Price/SF

Avg. Vacancy At Sale

144

4.7%

$619

9.8%

SALE COMPARABLE LOCATIONS

SALE COMPARABLES SUMMARY STATISTICS Sales Attributes

Low

Average

Median

High

$140,396

$5,549,700

$2,250,000

$198,001,200

Price/SF

$30

$619

$581

$6,434

Cap Rate

1.3%

4.7%

4.5%

8.4%

Time Since Sale in Months

0.1

6.2

5.9

12.0

Property Attributes

Low

Average

Median

High

Building SF

600

8,775

4,191

255,765

Typical Floor SF

600

5,330

2,513

63,078

Vacancy Rate At Sale

9.8%

100%

1890

1936

1927

2018

Sale Price

Stories

Year Built Star Rating

2.1

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Sales Past 12 Months San Francisco Retail RECENT SIGNIFICANT SALES Property Property Name - Address

6X6 935-965 Market St

Lucky 1322 El Camino Real

Lucky Supermarket 6843 Mission St

1906-1950 El Camino Real

Lucky Market 1135 Old County Rd

775 Serramonte Blvd

870 Santa Cruz Ave

851 Old County Rd

4200 Geary Blvd

803 Old County Rd

1200-1250 El Camino Real

2838 S El Camino Real

414-432 Sutter St

1175 Fell St

231-233 Grant Ave

616 S B St

3512 16th St

Bank Of The Orient 317-319 6th Ave

776-780 Valencia St

Sale

Rating

Yr Built

Bldg SF

Vacancy

Sale Date

Price

Price/SF

Cap Rate

2017

255,765

77.6%

9/4/2020

$198,001,200

$774

1989

56,280

11/20/2020

$31,000,000

$551

63,078

11/20/2020

$27,000,000

$428

35,799

3/23/2020

$20,340,885

$568

2000

44,000

11/20/2020

$20,087,500

$457

38,087

3/24/2020

$18,190,000

$478

1900

22,500

12/15/2020

$18,100,000

$804

18,253

5/1/2020

$10,723,505

$587

1918

16,882

5/13/2020

$10,500,000

$622

1975

7,650

4/29/2020

$10,000,000

$1,307

1999

8,014

5/29/2020

$9,550,000

$1,192

4.6%

21,700

12/22/2020

$9,100,000

$419

1909

12,668

9/30/2020

$9,000,000

$710

1968

1,360

12/15/2020

$8,750,000

$6,434

4.5%

1968

1,360

7/17/2020

$8,300,000

$6,103

1907

11,000

31.6%

8/13/2020

$7,480,000

$680

7,150

2/11/2021

$7,350,000

$1,028

1915

8,729

3/30/2020

$7,300,000

$836

1975

6,592

6/5/2020

$6,950,000

$1,054

4.6%

1924

6,200

3/18/2020

$6,800,000

$1,097

7.7%

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Economy San Francisco Retail San Francisco's economy grew rapidly in the 2010's expansion cycle and maintained strength heading into 2020 before the coronavirus pandemic hit. Annual job growth prevailed at 3% in February, but social distancing measures have caused significant economic disruption, leading to the sharpest employment downturn on record and a migration out of the city. Layoffs and furloughs in the hospitality, restaurant, retail, and entertainment sectors were severe. Professional employment sectors were also hit in the downturn, though not as sharply. A modest recovery of lost jobs ensued in May and gained steam in June as the measured reopening of San Francisco's economy helped drive a rebound. However, plans to reopen businesses were stalled as coronavirus cases climbed again. Outdoor dining and indoor retail were allowed, but the reopening of salons, bars, and museums initially planned for late June was paused, and the pace of job recovery has been uneven and weak as a result. Hotels, indoor malls, gyms, indoor restaurants, and hair and nail salons were finally allowed to open at a limited capacity in September. But, a resurgence of coronavirus cases in December led to a renewed shutdown of establishments, including all restaurant dining including outdoor patios and parklets, as well as nonessential office work. Public schools are distance learning, while entertainment venues including movie theaters, night clubs, and music halls have remained shuttered since the pandemic hit. Total employment in the metro division is down 9.1%, or by 109,000 as of December's jobs report released in January, while employment within typical office-using job sectors is still down 2.1% or by 10,200, from their prepandemic peaks reached in February. Start-ups in hardhit segments of the economy have slashed headcounts considerably, while mainstays like Google have slowed their rate of hiring and real estate expansions as ad revenue declines. Most industries are recovering now, though as the economy slowly reopens. Unemployment had fallen below 2% prior to the pandemic, according to the U.S. Department of Labor. Job opportunities were abundant and outnumbered qualified job seekers, but job listings have fallen dramatically over the past few months, and unemployment skyrocketed into the double-digits in the Springtime, ticking back to 5.4% as of November, but rising in December to 6.1%. The labor force has declined slightly since the pandemic hit due to a migration out of

the market. The trajectory of San Francisco's economy and commercial real estate markets will depend on how widely the virus and its variants spread, how quickly the vaccine is distributed, how long containment policies like social distancing need to be maintained, and how quickly those with lost jobs can find employment again. On the positive side, Oxford Economics projects that San Francisco's economic recovery will outpace most other markets due to its industry makeup. San Francisco does not rely as heavily on leisure & hospitality employment as Las Vegas, Orlando, or New Orleans does, but it is a popular tourist destination and will be negatively impacted by a slowdown in travel. Large tech firms reliant on advertising like Facebook and Google saw lower revenues in 20Q2, but have seen a rebound to new record levels. Google and Facebook capture the majority of all internet ad revenue and are well-positioned for an economic rebound. Internet ad revenue was rising at a 17% annual growth rate before the pandemic hit, according to the Interactive Advertising Bureau. Some digital products have seen soaring demand amid the pandemic. For example, communications platforms like Zoom Video and Microsoft Teams have become necessary tools for business survival, and Netflix has seen an influx of new subscribers. Business software investment growth overall has slowed a touch but continues to rise through the downturn, while ecommerce retail sales have spiked. Venture capitalists have invested heavily in locallybased start-ups, as well as mature, but still privatelyheld "unicorn" companies valued over $1 billion. Venture capital funding remained fairly robust in 2020 all things considered, but has faded from 2019 and 2018's recordsetting pace, according to PwC's MoneyTree Report, and may decline further if an uncertain economic environment shakes confidence among investors. A handful of VC firms are leaving for Texas, but Silicon Valley will remain the leading capital provider for start-ups as both are entrenched in the area, and feed off of its educational institutions, and mega tech and biotech firms. Locally based Okta, Roku, and Mulesoft each went public in 2017 with successful results, as did DocuSign and Survey Monkey in 2018. However, a number of Bay Area companies that went public in the 2010's economic expansion period are now trading below their initial IPO

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Economy San Francisco Retail price. Fitbit, Lending Club, Cloudera, Dropbox, and Eventbrite have all seen their valuations deteriorate since going public, and 2020 was particularly rough for tech unicorns going public. The IPO's of Lyft, Uber, and Slack were considered flops, while market valuations for Pinterest and PagerDuty have declined after initially rising. Some local start-ups like Zoom Video did launch public offerings that performed well in 2019, but the majority were disappointing as high private market valuations, profitability concerns and the prospect of tighter regulations weighed on investors. AirBnB went public in December 2020 despite a loss in bookings due to the pandemic. AirBnB secured two billion-dollar loans in April at a slashed internal valuation as financial losses mounted, and laid off 1,900 employees or roughly a quarter of its global workforce in May. The travel company's stock soared at the onset of 2021 though, and they announced an expansion to Atlanta most recently.AirBnB's local staff had grown larger than 3,000 before the recent cuts. Despite the notable downturns among several highprofile newcomers, the NASDAQ index, which is heavily dominated by San Francisco Bay Area-based tech companies and correlates with local office using employment historically, has already recovered its coronavirus pandemic and oil shock sell-off losses of early 2020. Large-scale expansion plans from several publicly traded technology companies appear to have slowed, yet remain intact, though it will be critical to watch how the fallout from the pandemic and mobile work adoption affects the tech sector and local real estate demand moving forward. Emblematic of San Francisco's transition to a tech industry-led economy, Salesforce surpassed Wells Fargo as the city's largest employer in 2018. The customer relationship management software company continued to grow its headcount after taking occupancy in the recently delivered Salesforce Tower, but in a sign of the times, announced the adoption of remote work options. Salesforce now employs more than 9,000 based in San Francisco. Led by tech firms, roughly 350,000 jobs were created in the metro division in the 2010's economic expansion period, including more than 35,000 jobs added in 2019. On a national scale, coronavirus recession job losses wiped out all gains made in the 2010's expansion cycle, but job growth was so strong in San Francisco over the past decade, the market did not give up all of its expansion cycle gains in the recent downturn.

Facebook has added capacity for well over 5,000 employees at 181 Fremont Street and Park Tower at Transbay, two new skyscrapers recently completed in the South Financial District. Lyft, Dropbox, and Affirm more than doubled their headcounts in the past several years. Uber had aggressively increased its San Francisco headcount to more than 5,000, but rising profitability concerns led to recent job cuts, including several hundred throughout the Bay Area in the second half of 2019, and the elimination of 6,700 positions globally or 25% of its workforce and shuttering of 25 offices including Pier 70's in 2020 in response to the coronavirus pandemic and economic downfall that hit the company. In the finance sector, Wells Fargo's employment in the Bay Area has declined moderately for several years. Wells closed its historic Crocker building branch in late 2019 and may eventually move its headquarters out of town. Charles Schwab has also relocated many positions to lower-cost markets and reassigned its headquarters to Dallas effective 2021, in conjunction with its acquisition of TD Ameritrade, but still maintains a downtown office. Fintech start-ups like SoFi, Affirm, and Lending Club had been a bright spot, boosting employment within the sector, which was gaining momentum heading into 2020 since stagnating in 2017. However, even financial service firms have suffered losses in the coronavirus -pandemic recession. Lending Club laid off 460 employees in April 2020, accounting for 30% of its workforce. The local finance sector was devastated in the dot-com crash and slowly recovered from 2007–09 credit crisis consolidations. Employment in financial activities finally rose above its 2007 prerecession peak late in the 2010's economic expansion cycle, but never returned to levels achieved in the 1990's. San Francisco's economy was roaring ahead into 2020, as it typically does in expansion periods. Professional and business services - by far the market's largest employment and office using sector - was expanding by more than 3% annually before the coronavirus pandemic hit in March. Since the city's early gold rush founding, San Francisco has experienced rapid booms and busts, and the pandemic recession has once again impacted the local economy sharply, as history repeats itself. Based on rapid rent and pricing gains during the expansion, pockets of commercial real estate contained a heightened vulnerability to a downfall.

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Economy San Francisco Retail Access to cheap capital and an expanding global economy led by technological advancements drove Bay Area commercial real estate markets to new heights over the past decade. Changes in trade policy and slowing global growth presented headwinds to the economy in the mature phases of the expansion cycle, but the lingering shutdown in response to the coronavirus pandemic has sent the country into a deep and rapid recession. The success of mitigation efforts and federal bailouts, in addition to behavior changes in response to the pandemic, will have a profound impact on national economic recovery and commercial real estate demand.

Real estate investment trusts have stockpiled cash amid the uncertain economic times and lenders were swamped by small-business owners looking for relief as emergency actions in response to the coronavirus closed down tens of thousands of restaurants, bars, theaters, gyms and stores across the country. Business closures in San Francisco are already elevated well above that of other metro's according to Yelp, and the Bay Area is still slowly opening in the new year following a second surge of coronavirus cases. Non-essential workers are advised to remain away from offices again, and most are planning for a potential return in the summer of 2021 at this point. We will be updating our analysis as more information becomes available.

SAN FRANCISCO EMPLOYMENT BY INDUSTRY IN THOUSANDS Current Level

12 Month Change

10 Year Change

5 Year Forecast

NAICS Industry

Jobs

Market

Manufacturing

0.4

-6.31%

-4.05%

0.51%

0.59%

0.56%

0.53%

Trade, Transportation and Utilities

142

0.7

-7.09%

-3.01%

1.29%

0.86%

1.35%

0.61%

0.6

-6.10%

-3.10%

-0.05%

0.42%

1.28%

0.70%

Financial Activities

1.3

0.88%

-0.99%

2.55%

1.29%

0.09%

0.74%

Government

118

0.7

-9.83%

-5.42%

-0.12%

-0.35%

1.87%

0.99%

Natural Resources, Mining and Construction

0.7

-3.38%

-3.37%

4.49%

2.59%

1.80%

1.14%

Education and Health Services

141

0.8

-4.11%

-3.89%

2.23%

1.56%

1.82%

1.87%

Professional and Business Services

291

1.8

-2.31%

-4.23%

4.84%

1.87%

1.98%

1.63%

Information

4.6

-6.15%

-6.86%

9.44%

0.02%

4.39%

2.28%

Leisure and Hospitality

106

1.0

-29.33%

-18.15%

-0.66%

0.35%

7.32%

4.38%

Other Services

0.9

-13.47%

-6.68%

0.66%

0.33%

2.92%

1.37%

1,098

1.0

-8.01%

-5.55%

2.51%

0.92%

2.48%

1.49%

Retail Trade

Total Employment

Source: Oxford Economics LQ = Location Quotient

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Economy San Francisco Retail YEAR OVER YEAR JOB GROWTH

Source: Oxford Economics

DEMOGRAPHIC TRENDS Current Level Demographic Category

12 Month Change

10 Year Change

5 Year Forecast

Metro

1,656,102

330,665,094

0.3%

0.5%

0.8%

0.6%

0.3%

0.5%

Households

627,954

123,592,047

0.3%

0.4%

0.5%

0.7%

0.3%

0.5%

Median Household Income

$127,226

$69,274

1.4%

4.4%

4.6%

3.3%

3.9%

2.1%

Labor Force

997,831

160,791,656

-5.2%

-2.1%

1.3%

0.5%

2.2%

0.8%

5.9%

6.7%

3.8%

3.0%

-0.2%

-0.3%

Population

Unemployment

Source: Oxford Economics

POPULATION GROWTH

LABOR FORCE GROWTH

INCOME GROWTH

Source: Oxford Economics

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Submarkets San Francisco Retail SAN FRANCISCO SUBMARKETS

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Submarkets San Francisco Retail SUBMARKET INVENTORY Inventory No.

Submarket

12 Month Deliveries

Under Construction

Bldgs

SF (000)

% Market

Rank

Bldgs

SF (000)

Percent

Rank

Bldgs

SF (000)

Percent

Rank

Bayview/Hunters Point

143

798

1.0%

Belmont/San Carlos

374

2,356

2.9%

Brisbane/Daly City

449

5,447

6.6%

Burlingame

262

2,282

2.8%

Civic Center

297

0.4%

Financial District

709

0.9%

Foster City/Redwood Shrs

764

0.9%

Jackson Square

299

0.4%

Menlo Park

227

1,864

2.3%

MidMarket

598

0.7%

Mission Bay/China Basin

509

0.6%

Mission/Potrero

989

6,710

8.2%

0.1%

Peninsula Coastline

322

3,103

3.8%

0.1%

Redwood City

500

4,088

5.0%

0.2%

Rincon/South Beach

423

0.5%

San Bruno/Millbrae

416

3,721

4.5%

San Mateo

541

5,139

6.3%

Showplace Square

1,117

1.4%

South Financial District

322

0.4%

South of Market

191

1,736

2.1%

South San Francisco

259

2,794

3.4%

1.8%

Southern City

1,921

9,060

11.1%

Treasure/Yerba Buena Isl…

0.1%

Union Square

142

2,956

3.6%

264

8.9%

Van Ness/Chinatown

875

6,883

8.4%

Waterfront/North Beach

255

2,730

3.3%

West of Van Ness

2,302

13,184

16.1%

Yerba Buena

2,038

2.5%

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Submarkets San Francisco Retail SUBMARKET RENT Market Rent No.

12 Month Market Rent

QTD Annualized Market Rent

Submarket

Per SF

Rank

Growth

Rank

Growth

Rank

Bayview/Hunters Point

$23.05

-4.8%

-9.0%

Belmont/San Carlos

$37.46

-3.9%

-6.8%

Brisbane/Daly City

$39.08

-3.3%

-7.0%

Burlingame

$45.38

-3.8%

-6.7%

Civic Center

$50.62

-4.1%

-7.0%

Financial District

$59.28

-3.7%

-7.0%

Foster City/Redwood Shrs

$43.90

-2.9%

-6.7%

Jackson Square

$50.72

-3.2%

-6.6%

Menlo Park

$47.35

-4.1%

-7.3%

MidMarket

$42.78

-3.0%

-6.7%

Mission Bay/China Basin

$42.39

-2.9%

-6.9%

Mission/Potrero

$43.14

-4.1%

-7.1%

Peninsula Coastline

$32.61

-3.7%

-7.4%

Redwood City

$35.71

-4.6%

-7.7%

Rincon/South Beach

$42.66

-3.1%

-6.7%

San Bruno/Millbrae

$36.74

-3.5%

-7.0%

San Mateo

$37.77

-3.4%

-6.6%

Showplace Square

$37.81

-2.7%

-6.6%

South Financial District

$52.82

-2.9%

-6.8%

South of Market

$30.96

-3.5%

-6.9%

South San Francisco

$29.11

-4.4%

-8.1%

Southern City

$39.70

-4.4%

-7.1%

Treasure/Yerba Buena Isl…

$5.45

-0.5%

-0.8%

Union Square

$58.61

-2.9%

-6.7%

Van Ness/Chinatown

$46.20

-3.7%

-6.8%

Waterfront/North Beach

$71.94

-3.2%

-6.7%

West of Van Ness

$49.39

-4.4%

-7.0%

Yerba Buena

$56.25

-2.6%

-6.5%

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Submarkets San Francisco Retail SUBMARKET VACANCY & NET ABSORPTION Vacancy No.

Submarket

12 Month Absorption

Percent

Rank

% of Inv

Rank

Construc. Ratio

Bayview/Hunters Point

38,579

4.8%

(1,406)

-0.2%

Belmont/San Carlos

90,258

3.8%

(57,204)

-2.4%

Brisbane/Daly City

89,520

1.6%

21,114

0.4%

Burlingame

67,797

3.0%

(13,715)

-0.6%

Civic Center

21,470

7.2%

(6,453)

-2.2%

Financial District

22,427

3.2%

(4,029)

-0.6%

Foster City/Redwood Shrs

113,880

14.9%

(11,628)

-1.5%

Jackson Square

14,521

4.9%

(9,852)

-3.3%

Menlo Park

37,599

2.0%

(10,838)

-0.6%

MidMarket

231,652

38.8%

2,112

0.4%

Mission Bay/China Basin

1,776

0.3%

(1,016)

-0.2%

Mission/Potrero

185,356

2.8%

(75,589)

-1.1%

Peninsula Coastline

43,190

1.4%

(8,626)

-0.3%

Redwood City

197,676

4.8%

(82,405)

-2.0%

Rincon/South Beach

10,802

2.6%

(6,518)

-1.5%

San Bruno/Millbrae

368,381

9.9%

(302,586)

-8.1%

San Mateo

494,994

9.6%

(128,638)

-2.5%

Showplace Square

32,990

3.0%

(21,119)

-1.9%

South Financial District

36,745

11.4%

28,015

8.7%

South of Market

74,609

4.3%

(42,373)

-2.4%

South San Francisco

235,815

8.4%

51,763

1.9%

1.0

Southern City

313,331

3.5%

(43,134)

-0.5%

Treasure/Yerba Buena Isl…

Union Square

286,217

9.7%

(40,760)

-1.4%

Van Ness/Chinatown

249,065

3.6%

(57,657)

-0.8%

Waterfront/North Beach

271,937

10.0%

(82,475)

-3.0%

West of Van Ness

391,311

3.0%

(146,163)

-1.1%

Yerba Buena

23,467

1.2%

(4,378)

-0.2%

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Supply & Demand Trends San Francisco Retail OVERALL SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

81,837,240

(53,831)

-0.1%

(72,494)

-0.1%

2024

81,891,071

(48,766)

-0.1%

(27,117)

2023

81,939,837

(119,962)

-0.1%

95,205

0.1%

2022

82,059,799

(208,098)

-0.3%

388,686

0.5%

2021

82,267,897

349,454

0.4%

(650,777)

-0.8%

YTD

81,918,443

(323,905)

-0.4%

2020

81,918,443

1,454

(833,866)

-1.0%

2019

81,916,989

(393,783)

-0.5%

(572,078)

-0.7%

2018

82,310,772

(312,313)

-0.4%

(819,152)

-1.0%

2017

82,623,085

416,237

0.5%

137,195

0.2%

3.0

2016

82,206,848

81,298

0.1%

(11,729)

2015

82,125,550

(256,574)

-0.3%

(256,638)

-0.3%

2014

82,382,124

(34,684)

186,925

0.2%

2013

82,416,808

(176,329)

-0.2%

388,457

0.5%

2012

82,593,137

(315,069)

-0.4%

(204,187)

-0.2%

2011

82,908,206

(3,294)

(45,172)

-0.1%

2010

82,911,500

19,598

184,868

0.2%

0.1

2009

82,891,902

400,344

0.5%

97,361

0.1%

4.1

MALLS SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

5,060,782

(43,929)

-0.9%

(84,719)

-1.7%

2024

5,104,711

(42,406)

-0.8%

(84,625)

-1.7%

2023

5,147,117

(100,657)

-1.9%

(52,984)

-1.0%

2022

5,247,774

(181,769)

-3.3%

53,978

1.0%

2021

5,429,543

348,575

6.9%

54,008

1.0%

6.5

YTD

5,080,968

(250,223)

-4.9%

2020

5,080,968

(25,394)

-0.5%

2019

5,080,968

91,485

1.8%

(84,936)

-1.7%

2018

4,989,483

36,184

0.7%

2017

4,989,483

421,313

9.2%

207,141

4.2%

2.0

2016

4,568,170

(24,084)

-0.5%

2015

4,568,170

(9,902)

-0.2%

2014

4,568,170

98,952

2.2%

2013

4,568,170

(47,606)

-1.0%

2012

4,568,170

53,214

1.2%

2011

4,568,170

(100,950)

-2.2%

2010

4,568,170

14,089

0.3%

2009

4,568,170

(20,572)

-0.5%

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Supply & Demand Trends San Francisco Retail POWER CENTER SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

2,282,725

3,838

0.2%

2024

2,282,725

11,326

0.5%

2023

2,282,725

21,878

1.0%

2022

2,282,725

5,179

0.2%

2021

2,282,725

(29,520)

-1.3%

YTD

2,282,725

10,493

0.5%

2020

2,282,725

(66,631)

-2.9%

2019

2,282,725

24,365

1.1%

2018

2,282,725

(35,075)

-1.5%

2017

2,282,725

67,589

3.0%

2016

2,282,725

(166,733)

-7.3%

2015

2,282,725

(3,847)

-0.2%

2014

2,282,725

10,334

0.5%

2013

2,282,725

60,290

2.6%

2012

2,282,725

(37,882)

-1.7%

2011

2,282,725

6,000

0.3%

11,719

0.5%

0.5

2010

2,276,725

3,883

0.2%

2009

2,276,725

142,906

6.3%

NEIGHBORHOOD CENTER SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

7,646,645

(359)

13,925

0.2%

2024

7,647,004

(242)

24,748

0.3%

2023

7,647,246

(612)

64,530

0.8%

2022

7,647,858

(948)

31,340

0.4%

2021

7,648,806

(681)

(114,069)

-1.5%

YTD

7,649,487

(5,158)

-0.1%

2020

7,649,487

(240,536)

-3.1%

2019

7,649,487

7,209

0.1%

12,152

0.2%

0.6

2018

7,642,278

(94,674)

-1.2%

2017

7,642,278

43,390

0.6%

2016

7,642,278

48,330

0.6%

2015

7,642,278

17,635

0.2%

17,365

0.2%

1.0

2014

7,624,643

67,877

0.9%

55,986

0.7%

1.2

2013

7,556,766

17,590

0.2%

2012

7,556,766

8,127

0.1%

2011

7,556,766

37,460

0.5%

97,794

1.3%

0.4

2010

7,519,306

1,624

2009

7,519,306

239,683

3.3%

118,850

1.6%

2.0

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Supply & Demand Trends San Francisco Retail STRIP CENTER SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

1,826,960

(852)

2024

1,826,960

2023

1,826,960

1,863

0.1%

2022

1,826,960

5,691

0.3%

2021

1,826,960

(22,033)

-1.2%

YTD

1,826,960

(6,493)

-0.4%

2020

1,826,960

(25,177)

-1.4%

2019

1,826,960

9,428

0.5%

2018

1,826,960

10,074

0.6%

2017

1,826,960

11,661

0.6%

(12,248)

-0.7%

2016

1,815,299

27,355

1.5%

2015

1,815,299

9,700

0.5%

2,903

0.2%

3.3

2014

1,805,599

33,188

1.8%

2013

1,805,599

2,403

0.1%

25,668

1.4%

0.1

2012

1,803,196

7,140

0.4%

2011

1,803,196

(4,127)

-0.2%

2010

1,803,196

12,349

0.7%

36,992

2.1%

0.3

2009

1,790,847

14,000

0.8%

(19,707)

-1.1%

GENERAL RETAIL SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

63,927,770

(9,446)

(4,521)

2024

63,937,216

(6,083)

20,851

2023

63,943,299

(18,514)

57,608

0.1%

2022

63,961,813

(25,019)

288,106

0.5%

2021

63,986,832

1,831

(528,835)

-0.8%

YTD

63,985,001

(72,524)

-0.1%

2020

63,985,001

1,454

(470,139)

-0.7%

2019

63,983,547

(492,477)

-0.8%

(533,087)

-0.8%

2018

64,476,024

(312,313)

-0.5%

(725,169)

-1.1%

2017

64,788,337

(16,737)

(162,602)

-0.3%

2016

64,805,074

81,298

0.1%

98,998

0.2%

0.8

2015

64,723,776

(283,909)

-0.4%

(270,729)

-0.4%

2014

65,007,685

(102,561)

-0.2%

(16,551)

2013

65,110,246

(178,732)

-0.3%

308,872

0.5%

2012

65,288,978

(315,069)

-0.5%

(250,307)

-0.4%

2011

65,604,047

(46,754)

-0.1%

(55,156)

-0.1%

2010

65,650,801

7,249

106,913

0.2%

0.1

2009

65,643,552

146,661

0.2%

(82,132)

-0.1%

Copyrighted report licensed to COMPASS - 1028085

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Supply & Demand Trends San Francisco Retail OTHER SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

1,092,358

(97)

(165)

2024

1,092,455

(35)

521

2023

1,092,490

(179)

2,310

0.2%

2022

1,092,669

(362)

4,392

0.4%

2021

1,093,031

(271)

(10,328)

-0.9%

YTD

1,093,302

2020

1,093,302

(5,989)

-0.5%

2019

1,093,302

2018

1,093,302

(10,492)

-1.0%

2017

1,093,302

(6,075)

-0.6%

2016

1,093,302

4,405

0.4%

2015

1,093,302

7,572

0.7%

2014

1,093,302

5,016

0.5%

2013

1,093,302

23,643

2.2%

2012

1,093,302

15,521

1.4%

2011

1,093,302

5,548

0.5%

2010

1,093,302

21,367

2.0%

2009

1,093,302

(41,984)

-3.8%

Copyrighted report licensed to COMPASS - 1028085

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Rent & Vacancy San Francisco Retail OVERALL RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$49.55

145

1.2%

10.2%

3,758,985

4.6%

2024

$48.97

143

2.0%

8.9%

3,755,776

4.6%

-0.1%

2023

$48.03

140

3.7%

6.9%

3,799,379

4.6%

-0.3%

2022

$46.34

135

6.2%

3.1%

4,026,108

4.9%

-0.7%

2021

$43.63

127

-0.6%

-3.0%

4,622,175

5.6%

1.2%

YTD

$43.45

127

-1.0%

-3.3%

3,945,365

4.8%

0.4%

2020

$43.90

128

-2.3%

3,621,460

4.4%

1.0%

2019

$44.95

131

2.6%

2,786,140

3.4%

0.2%

2018

$43.82

128

2.6%

-2.5%

2,650,663

3.2%

0.6%

2017

$42.71

125

3.2%

-5.0%

2,137,353

2.6%

0.3%

2016

$41.40

121

3.5%

-7.9%

1,857,241

2.3%

0.1%

2015

$39.99

117

5.4%

-11.0%

1,767,604

2.2%

2014

$37.94

111

5.5%

-15.6%

1,767,540

2.1%

-0.3%

2013

$35.98

105

4.3%

-20.0%

1,989,149

2.4%

-0.7%

2012

$34.51

101

2.4%

-23.2%

2,553,935

3.1%

-0.1%

2011

$33.68

0.5%

-25.1%

2,664,817

3.2%

0.1%

2010

$33.52

0.4%

-25.4%

2,622,939

3.2%

-0.2%

2009

$33.40

-2.6%

-25.7%

2,788,209

3.4%

0.4%

MALLS RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$52.80

151

0.8%

9.9%

510,320

10.1%

0.6%

2024

$52.39

150

1.5%

9.0%

481,633

9.4%

0.5%

2023

$51.62

148

3.2%

7.4%

457,942

8.9%

-0.8%

2022

$50.01

143

5.8%

4.1%

509,993

9.7%

-4.0%

2021

$47.28

135

-1.0%

-1.6%

745,693

13.7%

4.9%

YTD

$47.31

135

-0.9%

-1.6%

701,312

13.8%

4.9%

2020

$47.76

137

-0.6%

451,089

8.9%

0.5%

2019

$48.06

138

4.2%

425,695

8.4%

3.4%

2018

$46.13

132

4.3%

-4.0%

249,274

5.0%

-0.7%

2017

$44.22

127

3.8%

-8.0%

285,458

5.7%

4.2%

2016

$42.59

122

3.1%

-11.4%

71,286

1.6%

0.8%

2015

$41.30

118

5.5%

-14.1%

35,702

0.8%

0.2%

2014

$39.15

112

5.6%

-18.6%

25,800

0.6%

-2.2%

2013

$37.07

106

4.6%

-22.9%

124,752

2.7%

1.0%

2012

$35.43

101

3.1%

-26.3%

77,146

1.7%

-1.2%

2011

$34.37

0.1%

-28.5%

130,360

2.9%

2.2%

2010

$34.33

0.8%

-28.6%

29,410

0.6%

-0.3%

2009

$34.05

-2.5%

-29.2%

43,499

1.0%

0.5%

Copyrighted report licensed to COMPASS - 1028085

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Rent & Vacancy San Francisco Retail POWER CENTER RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$48.54

152

1.0%

11.4%

196,770

8.6%

-0.2%

2024

$48.06

150

1.7%

10.3%

200,608

8.8%

-0.5%

2023

$47.24

148

3.4%

8.4%

211,934

9.3%

-1.0%

2022

$45.68

143

5.9%

4.8%

233,812

10.2%

-0.2%

2021

$43.11

135

-0.7%

-1.1%

238,991

10.5%

1.3%

YTD

$43.01

135

-1.0%

-1.3%

198,978

8.7%

-0.5%

2020

$43.42

136

-0.4%

209,471

9.2%

2.9%

2019

$43.58

136

4.2%

142,840

6.3%

-1.1%

2018

$41.84

131

4.1%

-4.0%

167,205

7.3%

1.5%

2017

$40.18

126

3.9%

-7.8%

132,130

5.8%

-3.0%

2016

$38.67

121

3.2%

-11.2%

199,719

8.7%

7.3%

2015

$37.47

117

5.4%

-14.0%

32,986

1.4%

0.2%

2014

$35.53

111

5.6%

-18.5%

29,139

1.3%

-0.5%

2013

$33.64

105

4.5%

-22.8%

39,473

1.7%

-2.6%

2012

$32.20

101

2.8%

-26.1%

99,763

4.4%

1.7%

2011

$31.32

0.2%

-28.1%

61,881

2.7%

-0.3%

2010

$31.26

0.6%

-28.3%

67,600

3.0%

-0.2%

2009

$31.07

-2.8%

-28.7%

71,483

3.1%

-6.3%

NEIGHBORHOOD CENTER RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$49.28

149

1.1%

10.9%

486,012

6.4%

-0.2%

2024

$48.76

148

1.8%

9.8%

500,191

6.5%

-0.3%

2023

$47.88

145

3.5%

7.8%

525,081

6.9%

-0.9%

2022

$46.25

140

6.0%

4.1%

590,136

7.7%

-0.4%

2021

$43.62

132

-0.7%

-1.8%

622,339

8.1%

1.5%

YTD

$43.49

132

-1.0%

-2.1%

514,055

6.7%

0.1%

2020

$43.92

133

-1.1%

508,897

6.7%

3.1%

2019

$44.43

135

4.1%

268,361

3.5%

-0.1%

2018

$42.69

129

3.8%

-3.9%

273,304

3.6%

1.2%

2017

$41.12

125

4.2%

-7.4%

178,630

2.3%

-0.6%

2016

$39.47

120

3.2%

-11.1%

220,950

2.9%

-0.6%

2015

$38.26

116

5.4%

-13.9%

269,280

3.5%

2014

$36.30

110

5.4%

-18.3%

269,010

3.5%

0.1%

2013

$34.43

104

4.3%

-22.5%

257,119

3.4%

-0.2%

2012

$33.01

100

2.5%

-25.7%

274,709

3.6%

-0.1%

2011

$32.19

-27.5%

282,836

3.7%

-0.8%

2010

$32.18

0.3%

-27.6%

343,170

4.6%

2009

$32.09

-2.8%

-27.8%

344,794

4.6%

1.5%

Copyrighted report licensed to COMPASS - 1028085

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Rent & Vacancy San Francisco Retail STRIP CENTER RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$40.79

145

1.3%

10.1%

62,861

3.4%

2024

$40.29

143

2.0%

8.8%

62,009

3.4%

2023

$39.50

140

3.7%

6.6%

62,071

3.4%

-0.1%

2022

$38.07

135

6.3%

2.8%

63,934

3.5%

-0.3%

2021

$35.81

127

-0.5%

-3.3%

69,625

3.8%

1.2%

YTD

$35.63

126

-1.0%

-3.8%

54,085

3.0%

0.4%

2020

$36.01

128

-2.8%

47,592

2.6%

1.4%

2019

$37.04

131

3.3%

22,415

1.2%

-0.5%

2018

$35.84

127

3.1%

-3.2%

31,843

1.7%

-0.6%

2017

$34.75

123

4.3%

-6.2%

41,917

2.3%

1.3%

2016

$33.30

118

4.2%

-10.1%

18,008

1.0%

-1.5%

2015

$31.95

113

5.5%

-13.7%

45,363

2.5%

0.4%

2014

$30.27

107

5.2%

-18.3%

38,566

2.1%

-1.8%

2013

$28.78

102

4.1%

-22.3%

71,754

4.0%

-1.3%

2012

$27.65

2.0%

-25.3%

95,019

5.3%

-0.4%

2011

$27.10

0.1%

-26.8%

102,159

5.7%

0.2%

2010

$27.07

-1.1%

-26.9%

98,032

5.4%

-1.4%

2009

$27.37

-3.0%

-26.1%

122,675

6.9%

1.8%

GENERAL RETAIL RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$47.95

143

1.2%

10.0%

2,460,572

3.8%

2024

$47.36

141

2.0%

8.7%

2,468,962

3.9%

2023

$46.42

138

3.7%

6.5%

2,499,427

3.9%

-0.1%

2022

$44.75

133

6.3%

2.7%

2,582,825

4.0%

-0.5%

2021

$42.10

125

-0.6%

-3.4%

2,895,373

4.5%

0.8%

YTD

$41.91

125

-1.0%

-3.8%

2,436,846

3.8%

0.1%

2020

$42.35

126

-2.8%

2,364,322

3.7%

0.7%

2019

$43.57

130

2.1%

1,892,729

3.0%

2018

$42.67

127

2.1%

-2.1%

1,894,937

2.9%

0.7%

2017

$41.78

124

2.9%

-4.1%

1,475,610

2.3%

0.2%

2016

$40.59

121

3.6%

-6.8%

1,329,745

2.1%

-0.1%

2015

$39.18

117

5.4%

-10.1%

1,362,335

2.1%

2014

$37.18

111

5.4%

-14.7%

1,375,515

2.1%

-0.1%

2013

$35.27

105

4.2%

-19.1%

1,461,525

2.2%

-0.7%

2012

$33.83

101

2.4%

-22.4%

1,949,129

3.0%

-0.1%

2011

$33.05

0.6%

-24.1%

2,013,891

3.1%

2010

$32.85

0.2%

-24.6%

2,005,489

3.1%

-0.2%

2009

$32.78

-2.5%

-24.8%

2,105,153

3.2%

0.3%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 32

Rent & Vacancy San Francisco Retail OTHER RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$145.68

158

1.2%

12.3%

42,450

3.9%

2024

$144.00

156

1.9%

11.0%

42,373

3.9%

-0.1%

2023

$141.26

153

3.7%

8.8%

42,924

3.9%

-0.2%

2022

$136.27

148

6.2%

5.0%

45,408

4.2%

-0.4%

2021

$128.28

139

-0.5%

-1.2%

50,154

4.6%

0.9%

YTD

$127.73

138

-1.0%

-1.6%

40,089

3.7%

2020

$128.96

140

-0.6%

40,089

3.7%

0.5%

2019

$129.78

141

4.1%

34,100

3.1%

2018

$124.63

135

4.3%

-4.0%

34,100

3.1%

1.0%

2017

$119.53

129

3.7%

-7.9%

23,608

2.2%

0.6%

2016

$115.25

125

3.1%

-11.2%

17,533

1.6%

-0.4%

2015

$111.77

121

5.4%

-13.9%

21,938

2.0%

-0.7%

2014

$106.04

115

5.9%

-18.3%

29,510

2.7%

-0.5%

2013

$100.13

108

4.3%

-22.8%

34,526

3.2%

-2.2%

2012

$95.98

104

2.6%

-26.0%

58,169

5.3%

-1.4%

2011

$93.54

101

0.2%

-27.9%

73,690

6.7%

-0.5%

2010

$93.32

101

2.9%

-28.1%

79,238

7.2%

-2.0%

2009

$90.69

-1.8%

-30.1%

100,605

9.2%

3.8%

Copyrighted report licensed to COMPASS - 1028085

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Sale Trends San Francisco Retail OVERALL SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$765.69

238

4.3%

2024

$753.88

234

4.3%

2023

$732.45

227

4.3%

2022

$694.04

216

4.3%

2021

$636.06

198

4.4%

YTD

$27.9M

0.1%

$2,558,100

$556.65

4.4%

$637.87

198

4.5%

2020

160

$774.1M

1.6%

$5,178,585

$593.45

4.6%

$640.22

199

4.5%

2019

540

$1.4B

4.2%

$6,302,009

$650.02

4.6%

$657.84

204

4.5%

2018

554

$621.8M

5.4%

$3,153,058

$614.73

4.5%

$629.72

196

4.5%

2017

635

$1B

5.7%

$5,135,032

$596.52

4.8%

$600.99

187

4.5%

2016

422

$895.9M

3.1%

$4,252,162

$493.91

4.7%

$583.98

181

4.6%

2015

532

$1.2B

4.9%

$5,426,765

$524.99

4.6%

$551.33

171

4.7%

2014

467

$661.3M

3.2%

$2,760,177

$433.71

5.3%

$478.91

149

5.0%

2013

577

$514.8M

3.8%

$1,935,298

$370.22

5.8%

$406.31

126

5.4%

2012

709

$963.1M

5.7%

$4,378,295

$438.12

6.3%

$380.56

118

5.5%

2011

383

$492.9M

3.7%

$3,123,981

$255.87

6.7%

$328.54

102

6.0%

2010

213

$226.7M

1.7%

$1,616,349

$218.61

5.9%

$303.03

6.3%

(1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period. (2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred.

MALLS SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$768.59

245

4.1%

2024

$758.53

242

4.1%

2023

$739.29

236

4.1%

2022

$702.04

224

4.1%

2021

$644.28

206

4.2%

YTD

$647.22

206

4.4%

2020

$198M

5.0%

$198,001,200

$774.15

$650.16

207

4.3%

2019

$179M

5.0%

$179,000,000

$699.86

$670.07

214

4.3%

2018

$0.00

31.7%

$638.73

204

4.3%

2017

$0.00

16.6%

$603.12

192

4.4%

2016

$583.69

186

4.4%

2015

$174.4M

18.7%

$174,400,000

$298.96

6.5%

$549.47

175

4.5%

2014

$475.37

152

4.9%

2013

$401.95

128

5.2%

2012

$374.52

119

5.4%

2011

$182.6M

18.0%

$60,866,930

$222.29

$320.67

102

5.8%

2010

$297.37

6.1%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 34

Sale Trends San Francisco Retail POWER CENTER SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$644.00

248

4.2%

2024

$635.71

245

4.2%

2023

$619.55

239

4.2%

2022

$588.56

227

4.3%

2021

$540.76

208

4.4%

YTD

$542.90

209

4.5%

2020

$31M

2.5%

$31,000,000

$550.82

$545.46

210

4.5%

2019

$559.23

216

4.4%

2018

$516.78

199

4.6%

2017

$124.1M

19.9%

$17,728,571

$545.15

$487.93

188

4.6%

2016

$463.14

178

4.7%

2015

$0.00

6.1%

$434.79

168

4.8%

2014

$382.02

147

5.1%

2013

$7.8M

8.5%

$7,800,000

$519.86

$329.46

127

5.5%

2012

$143.8M

14.6%

$35,937,500

$432.51

5.7%

$308.69

119

5.6%

2011

$16.2M

1.6%

$8,095,000

$437.83

7.2%

$270.74

104

6.0%

2010

$0.00

6.8%

$248.65

6.3%

NEIGHBORHOOD CENTER SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

2025

$678.22

247

Cap Rate

4.3%

2024

$668.70

244

4.3%

2023

$650.82

237

4.3%

2022

$617.45

225

4.3%

2021

$566.64

206

4.5%

YTD

$568.64

207

4.6%

2020

$68.3M

1.9%

$17,084,375

$473.00

$570.78

208

4.6%

2019

$186.6M

5.3%

$16,959,091

$462.94

$586.71

214

4.5%

2018

$56M

1.4%

$28,000,000

$526.23

5.2%

$551.51

201

4.6%

2017

$175.9M

3.3%

$21,989,209

$699.07

$513.41

187

4.7%

2016

$268.2M

6.5%

$53,640,000

$542.54

$488.87

178

4.8%

2015

$181.8M

5.0%

$22,729,438

$472.67

4.8%

$459.41

167

4.9%

2014

$59.8M

2.0%

$7,474,090

$408.93

$399.11

145

5.2%

2013

$66.4M

1.9%

$1,480,247

$460.48

$341.83

125

5.6%

2012

$51.5M

3.5%

$12,884,063

$247.36

7.5%

$321.73

117

5.8%

2011

$50.1M

1.6%

$12,517,578

$425.86

$281.95

103

6.2%

2010

$259.94

6.5%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 35

Sale Trends San Francisco Retail STRIP CENTER SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$635.43

228

4.4%

2024

$625.29

224

4.4%

2023

$607.53

218

4.4%

2022

$575.16

206

4.5%

2021

$526.87

189

4.6%

YTD

$530.51

190

4.7%

2020

$30K

0.1%

$30.00

$530.86

190

4.7%

2019

$37.8M

3.1%

$7,370,000

$815.84

3.5%

$539.61

194

4.6%

2018

$11.5M

1.5%

$5,757,086

$872.02

4.0%

$520.85

187

4.7%

2017

$3.7M

1.1%

$1,850,000

$355.77

4.4%

$493.36

177

4.7%

2016

$16.8M

1.3%

$5,607,500

$699.57

4.0%

$477.57

171

4.8%

2015

$15M

3.3%

$5,008,333

$527.30

5.1%

$452.98

162

4.9%

2014

$15.9M

2.1%

$3,975,000

$419.53

7.6%

$400.12

144

5.2%

2013

$9.7M

5.0%

$1,619,167

$275.21

$343.80

123

5.5%

2012

$8M

3.0%

$4,022,500

$372.99

6.5%

$323.25

116

5.7%

2011

$7M

1.1%

$3,512,500

$355.00

7.0%

$283.74

102

6.1%

2010

$19.4M

4.9%

$3,236,842

$222.00

7.8%

$262.64

6.4%

GENERAL RETAIL SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

2025

$780.28

236

Cap Rate

4.3%

2024

$767.94

233

4.3%

2023

$745.71

226

4.3%

2022

$706.37

214

4.3%

2021

$647.17

196

4.4%

YTD

$27.9M

0.1%

$2,558,100

$556.65

4.4%

$648.82

196

4.5%

2020

153

$476.7M

1.4%

$3,276,677

$562.92

4.6%

$651.17

197

4.5%

2019

520

$1B

4.3%

$4,882,462

$686.73

4.7%

$668.94

203

4.5%

2018

544

$554.3M

4.3%

$2,862,572

$621.48

4.5%

$642.09

194

4.5%

2017

609

$729.4M

4.9%

$3,939,352

$587.18

4.8%

$615.14

186

4.5%

2016

414

$610.8M

3.1%

$2,997,136

$471.53

4.7%

$599.44

182

4.5%

2015

510

$849.8M

4.0%

$3,968,959

$639.27

4.5%

$565.33

171

4.6%

2014

454

$585.6M

3.8%

$2,571,811

$436.81

5.2%

$490.96

149

5.0%

2013

549

$430.9M

4.1%

$1,931,757

$360.27

5.8%

$416.05

126

5.3%

2012

693

$759.7M

5.7%

$3,614,906

$464.41

6.3%

$389.57

118

5.5%

2011

371

$237M

3.1%

$1,606,705

$254.70

6.7%

$336.44

102

5.9%

2010

204

$188.3M

1.6%

$1,409,428

$244.67

5.4%

$310.22

6.2%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 36

Sale Trends San Francisco Retail OTHER SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$965.64

235

4.2%

2024

$949.76

231

4.2%

2023

$922.07

225

4.2%

2022

$872.47

213

4.3%

2021

$798.31

194

4.4%

YTD

$799.16

195

4.5%

2020

$802.68

196

4.5%

2019

$833.83

203

4.4%

2018

$810.32

197

4.4%

2017

$774.51

189

4.4%

2016

$758.40

185

4.4%

2015

$775.80

189

4.3%

2014

$669.83

163

4.7%

2013

$562.88

137

5.1%

2012

$0.00

29.6%

$530.62

129

5.2%

2011

$418.89

102

5.9%

2010

$19M

16.5%

$19,000,000

$105.56

$385.35

6.2%

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2/22/2021 Page 37