At the end of August, Ikea opened a store in Downtown San Francisco, bucking the stream of retailers fleeing this once much-desired urban neighborhood. Specifically, the three-level, 52,000-square-foot store became the anchor tenant for a new mixed-use development that will also feature office, restaurants and entertainment. The opening wasn't necessarily a show of support by Ikea for the beleaguered city although it has certainly raised hopes among local officials that the new store will lead to more traffic downtown. Rather, Ikea's new San Francisco location is part of a larger expansion plan in the U.S. in which it will showcase smaller stores in urban areas instead of the suburbs where it has typically gone. The San Francisco store was among the first to open.  

But the local officials may well be on to something with their hopes for Downtown. A recent report from CBRE also points to reasons for guarded optimism for the neighborhood: Economic rent, which is average rents multiplied by the occupancy rate, is up 26% from the early 2022 trough, it said. 

In fact, there are glimmers of a retail recovery in many  outlying San Francisco neighborhoods, such as the Mission District, where economic rent is up slightly from pre-pandemic levels, it said. Meanwhile, the recovery is even further along in San Mateo, Brisbane and other residential communities along the Peninsula. "This likely reflects home-based workers spending less on Market Street and more at neighborhood cafés," it said. It may be that that dynamic will change – the Ikea store, for example, is located on Market Street and CBRE said it was possible it would be a harbinger of better times ahead.