The city of San Francisco has seen its retail real estate market boom thanks in part to an unlikely candidate. With more than three hundred new eating and drinking related establishments having surfaced in the past two years, retail investors are looking to take advantage of increased foot traffic.
The retail vacancy rate in San Francisco has been the lowest in the United States. It is expected to drop even further, as many business view the city as an area of opportunity and growth. Tourism in the city has increased substantially, and as such, opportunities for profit have grown.
The technology industry has also played a strong role in bring San Francisco to the forefront of retail real estate in the United States. Companies such as Twitter Inc. have experienced strong growth. It is the growth of such companies that has not only led to an incredibly low jobless rate in the city, but also an increased demand for restaurant dining startups.
The overall success of San Francisco’s retail market has been absolutely incredible, particularly in compared to the rest of the United States. While the country has an eleven percent vacancy rate among retail properties, San Francisco’s vacancy rate is at an unbelievably low three and a half percent.
San Francisco’s restaurant retail property success is not exactly typical. In fact, most dining establishments carry an enormous amount of risk due to upfront costs that average between two hundred and fifty thousand to five hundred thousand dollars. Many restaurant startups tend to fail, and thus, are usually not an ideal tenant for landlords or commercial mortgage lenders. However, the recent successes experienced by the San Francisco dining retail property market have both landlords and lenders reconsidering their perspective.
