by Randy Shaw on July 6, 2026 (BeyondChron.org)
New Mid-Market housing above vacant retail
Progress Made But More Help Needed
San Francisco’s Storefront Opportunity Grant program has made grants of $50,000-100,000 to 39 businesses which have opened or will do so by 2027. Restaurant and small business permits are being expedited. Entertainment zones facilitate outdoor drinking. San Francisco’s vacancy tax has had a positive impact.
But San Francisco still has far more vacant storefronts than before Covid. Is there more the city can do? Or has online purchasing permanently reduced the city’s retail demand?
High Vacancies in “Ring” Neighborhoods
San Francisco’s retail vacancies primarily impact the Mission, Castro, SOMA, Mid-Market, downtown, Cathedral Hill, lower Polk, lower Nob Hill and the Tenderloin. These were once known as the “ring” neighborhoods as they collectively form a ring spreading out from downtown,
Four factors have driven this retail decline.
First, there are fewer daily customers coming into San Francisco. Blame the steep reduction in BART ridership into the city and the huge rise in working at home. Downtown office space is still 29.7% vacant.
Second, these areas still suffer from the post-Covid boost in sidewalk drug activities. Negative perceptions remain even where sidewalk drug use has declined. As I have written about the Tenderloin, neighborhood improvements are not seen by those who have given up on area businesses.
Past and present drug activity discourages opening businesses. Labor and business costs are the same in Noe Valley or the Marina. Why would investors choose a more troubled neighborhood? Particularly when rents are not that much lower.
Third, some landlords benefiting from rising apartment rents feel no pressure to rent their retail spaces. They keep them vacant until someone meets their unrealistic price.
Fourth, changes in consumption practices have hurt restaurants and bars. The younger generation has reduced alcohol consumption. The widespread use of Ozempic—which reduces spending on food between 5-8%-–has people ordering less food.
Tenderloin bars were once recession-proof. But since Covid even historic Tenderloin bars have closed. Their spaces are either still vacant or have been converted to the now pervasive mini-markets. Several of which have been sued by the City Attorney’s office for being fronts for the drug trade.
What More Can City Do?
City Hall’s targeted, well-funded efforts to revive Union Square and Downtown should expand. For example, Mid-Market desperately needs help filling its ground floor retail. The retail situation is so bad that two major new housing developments at 50 Jones and 1028 Market (the Prism) haven’t even built out their retail spaces years after opening (see photo above).
Market Street between 7th and 5th streets is desolate due to the lack of retail. IKEA’s purchase in 2020 of the long vacant 250,000-square-foot building at 945 Market Street has not galvanized the area. Its Saluhall food hall has had a complete turnover of businesses
The closure of the former Westfield Centre sharply reduced foot traffic on that stretch of Market Street. No destination business in the area now exists.
Mayor Lurie’s San Francisco Downtown Development Corporation has yet to make the major investment that the core of Mid-Market needs. Plans to label Mid-Market the “Theater District” will help but a lot more is needed to return retail customers to the area.
Some trumpet the city’s renting more office space at 1455 Market as a boost for Mid-Market. But Market and 11th Street has not been a challenging area. “Mid-Market is customarily seen as between Ninth and Fifth Streets.
That’s where investment in Mid-Market also benefits SOMA and the Tenderloin. And where City Hall and its donor allies should invest a lot more time and money.
Will Upzoning Revive Retail?
In 2019 I wrote “Cure for Vacant Storefronts? Build Housing.” But the hundreds of new housing units that opened in Mid-Market after Covid have not produced successful retail. Building six to eight story buildings under the Family Zoning Plan or state law will fill vacant storefronts in neighborhoods where retail already thrives. That’s where upzoning will most likely encourage housing to actually be built.
Filling Tenderloin Vacancies
I have spent years trying fill Tenderloin retail vacancies. We had great success leading up to Covid. It’s a challenge in 2026 for the reasons stated above.
The Tenderloin has very few blocks with continuous retail. Little Saigon has long been the Tenderloin’s core commercial district.
In November 2023 I counted eighteen vacant storefronts in the two-block stretch of Larkin between Eddy and O’Farrell. There were still eighteen in February 2026. And the same number last week. It’s hard to attract businesses when Larkin between O’Farrell and Geary still has ongoing day and night sidewalk drug activities.
Businesses that have received city grants for Larkin Street on blocks without drug activities have still not opened.
But the situation could soon dramatically improve.
Chris Larsen has donated $5 million to revive Larkin Street and Little Saigon. This sends a clear message that the area is set for revival.
The Tenderloin has many landlords eager to give good rent deals to fill retail spaces. But Little Saigon has some owners uninterested in renting storefronts. They don’t post “For Rent” signs. They allow their spaces to physically deteriorate.
San Francisco enacted a vacancy tax to pressure such landlords. One idea that has been floated by a close Lurie ally is to strengthen the tax by increasing fines and have them kick in faster. The city would also get the power to put liens on buildings with longterm vacancies.
Areas like Little Saigon need enhanced penalties. Owners should not be able to hold once thriving retail districts hostage.
Has Online Shopping Forever Reduced Demand?
Some believe online shopping has permanently reduced in store demand. Yet that doesn’t explain why retail is booming in the city’s more affluent neighborhoods. After all, those customers also buy online.
Online shopping also doesn’t explain vacant dining spaces. Prior to Covid, restaurants, bars and cafes filled many of the now vacant storefronts in the ring neighborhoods. The city must focus on bringing these dining spots back.
So can San Francisco fill vacant storefronts? Yes the City Can.
Randy Shaw
Randy Shaw is the Editor of Beyond Chron and the Director of San Francisco’s Tenderloin Housing Clinic, which publishes Beyond Chron. Shaw’s new book is the revised and updated, The Tenderloin: Sex, Crime and Resistance in the Heart of San Francisco. His prior books include Generation Priced Out: Who Gets to Live in the New Urban America. The Activist’s Handbook: Winning Social Change in the 21st Century, and Beyond the Fields: Cesar Chavez, the UFW and the Struggle for Justice in the 21st Century.
