Is San Francisco’s Union Square district’s luxury retail industry in decline? Over the past four years, more than 30 stores have closed in this area known for its renowned retail. According to a report on the city’s retail market released earlier this summer by real estate firm Cushman & Wakefield, Union Square’s vacancy rate is set to reach a new peak of 20.6% in the first quarter of 2024. Experts generally explain this situation as the result of higher taxes, a general decline in competition from retail to online shopping, and an accelerating crime rate in this part of San Francisco.
Last spring, another disappointment came with the announcement that Macy’s department store would close in 2025. The announcement coincided with global plans to close 150 stores by 2026. With the 700,000 square feet of space closing, roughly 34.5% of Union Square could soon be vacant.
While the name that will take over the Macy’s building has yet to be announced, San Francisco Mayor London Breed recently declared that the city will work closely with Macy’s and any potential new owners to ensure that this iconic location continues to serve San Francisco for decades to come. Breed said, “There is great opportunity for this location, and I believe the city will continue to attract new investment and ideas for the foreseeable future.”
Things aren’t much better on nearby Market Street. After Anthropologie, Saks Off Fifth, and department store Nordstrom closed last summer, L’Occitane closed its store on the first floor of Emporium Center four months ago, ending more than 20 years in business at 865 Market Street. In its place, an IKEA store is set to open in August 2023, revitalizing a rundown corner of Market Street. The same sad truth can be seen on Post Street, Union Square’s other main thoroughfare, where the well-known secondhand luxury fashion store The RealReal closed last year, followed by jewelry store Shreve & Co. last May, leaving a 15,000-square-foot space vacant.
Maiden Lane, a temple of opulence in Union Square that was once a 19th-century brothel, and the two-block pedestrian mall between Kearny and Stockton streets, are now mostly empty. Some locals say it’s a ghost zone, particularly hard hit by the pandemic. Jimmy Choo, Marc Jacobs, Crate & Barrel, and Alexander McQueen have all closed, and only a handful of fashion stores remain, including Martin Margiela and the Frank Lloyd Wright-designed Isaia Boutique.
Amid this decayed atmosphere, it’s not all bad news. Many of the luxury industry’s biggest names remain in Union Square, and expansion projects are springing up all over the place. Louis Vuitton and Hermès still oversee Union Square at Geary and Grant Streets. Italian luxury brand Bottega Veneta is expanding in 2023, closing its Maiden Lane entrance and creating a monumental entrance on Geary Street. Yves Saint Laurent will occupy three floors on Grant Street starting in 2022. Acne Studios is celebrating its seventh anniversary next door, and Brunello Cucinelli recently doubled its space.
Another stimulus to the luxury market is the remarkable comeback of the watchmaking industry, with Patek Philippe opening a boutique on Post Street in 2023. This was followed by the German luxury watch retailer A. Lange & Söhne in March last year. In June, Swiss brand Breitling opened its 29th boutique in the United States. Together with Rolex, they form a new international destination in the luxury watch market.
Chanel has acquired the William Sonoma kitchenware boutique at 340 Post Street, with more luxury projects planned in the coming months. The $63 million sale will allow Chanel to occupy the three-story building by 2025.
Italian luxury brand Bvlgari is also taking advantage of the available space, announcing last April that it had signed a new lease with real estate firm Gossbanner for 9,000 square feet of space across multiple floors of its downtown facility. “This latest lease underscores Union Square’s continuing evolution and importance in the luxury retail industry,” said Marisa Rodriguez, CEO of the Union Square Alliance, Union Square’s business improvement district. “This move, along with recent news of Chanel’s expansion and the arrival of luxury watch brands such as Patek Philippe and Breitling, signals a trend of confidence and growth in the area.”
Despite the brightening outlook, other iconic addresses in Union Square remain at risk of closure, including the iconic Gumps, a luxury American home furnishings and interior décor retailer that’s been established in San Francisco since 1861. Owner John Chachas announced last year that the department store was considering closing, stating that “San Francisco has become an inhospitable place for our residents, unsafe for our employees, and unwelcoming for visitors from around the world.”
If Union Square’s luxury housing market isn’t completely gone, many of its buildings will likely see some floor space converted to residential use over the next few years. Just before summer, San Francisco City Council also made it a priority to turn Powell Street into one of the city’s leading retail and hospitality districts, and is working to improve Maiden Lane.
San Francisco is ranked as the second wealthiest city in the United States, but it is also seeing a rise in luxury retail. On Sacramento Street, a chic shopping strip in the Presidio Heights neighborhood, Shelley McMullen opened her second multi-brand store after Oakland. On the same sidewalk are two other luxury multi-brand stores: Betty Lynn and Famous Susan. New York designer Rachel Comey recently chose the Fillmore neighborhood to present her collection to many women and mothers in the neighborhood.
Finally, Palo Alto, the heart of Silicon Valley, is proving to be a thriving luxury retail destination. Considered one of the wealthiest cities in the U.S., with a median household income of nearly $190,000, the city is home to several high-end malls, including the Stanford Shopping Center, which currently houses all the top fashion and home goods brands.
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