San Francisco has been battered by the pandemic, from outward migration that triggered double-digit decreases in apartment rents to a near standstill in office leasing due to work-from-home policies. The retail sector, however, has managed to find some footing. According to the third quarter stats from Marcus & Millichap, asking rents have increased slightly and asset pricing has stabilized.

In the third quarter, asking retail rents increased .4% to $38 per square foot, according to the research, even as the market's vacancy rate grew 90 basis points to 6.1%. This was welcome news after retail rents dropped 8% last year during the pandemic. The rent growth shows a sharp recovery for the asset class. Asset pricing remained flat at just under $600 per square foot, but cap rates did increase slightly to an average of 5%.

While the rent growth is a positive sign, net absorption was negative again in the second quarter, thanks largely to new construction deliveries. Construction activity is up .6%, and the market grew by 400,000 square feet this quarter. Thankfully, jobs growth is also on an upward trajectory with employment up 5.4%, an addition of 56,000 new jobs.