What You Need To Know
Research:
- San Francisco's retail vacancy problem
Here’s what happened around the city for the week of July 13, 2025:
- Anonymous benefactor funds new Mandarin immersion k-8 public school
- SF to charge for Golden Gate Park parking and court reservations
Recent & upcoming openings:
- Brewfest 2025 (today only!)
Research
San Francisco's retail vacancy problem
Published July 14, 2025
San Francisco is grappling with stubbornly high retail vacancies. COVID and the rise of remote work are certainly big factors in our crisis, but they're not the whole story. In fact, San Francisco's retail vacancy crisis is the product of our uniquely rigid planning codes, a legal requirement for almost all new buildings to include ground-floor retail space, and inflexible rules for adaptive re-use.
The city's rules, designed for a bygone era of retail, are actively preventing the market from adapting and repurposing these underutilized assets. We've done it to ourselves, but we can choose to undo it.
Concentrated vacancies are the real issue
Surprisingly, San Francisco's overall retail vacancy rate isn't that high. It's higher than Seattle's, but lower than New York City's. But where it really stands apart is the concentrated pockets of vacancy.
Compared with New York City, where retail vacancy rates are just above pre-COVID rates, we're actually doing better! But vacancy rates in certain neighborhoods tell a different story. Union Square and the Van Ness corridor have staggering retail vacancy levels: 22% and 53% respectively. Unfortunately, there is no public retail vacancy data for Soma, Fisherman's Wharf, or Mission Street, but anecdotal reports indicate higher-than-city-average retail vacancy rates there, as well.
There's no clear relationship between the retail space per capita and the citywide vacancy rate, but the neighborhoods in San Francisco which are struggling the most are also the hardest hit from a lack of commuters and tourists. In these neighborhoods the market suddenly has a mismatch between supply of retail and demand for it. And, though some activists have claimed that "supply and demand don't apply to San Francisco," we really can't escape this fundamental rule of economics.
So if the supply is too big for the demand, why hasn't the market adjusted and repurposed the vacant spaces? Well, like so many things in San Francisco, that's largely illegal. Let's dig in.
Mis-sized market, mandatory expansion
Despite a growing population (about 21% growth between 2010 and 2020) and a strong local economy, Seattle has actually been shrinking its retail supply. In the past four years alone, about 1.5 million square feet of retail in Seattle was removed from the market and redeveloped into new mixed-use spaces. This is a far cry from San Francisco, where retail space has been added year-after-year despite sluggish demand.
You've probably noticed large empty spaces on the ground floor of new residential buildings. And you've probably noticed that they've sat vacant ever since that building was finished. But you probably didn't know that the developers don't care if they fill it. In fact, they already priced the vacant space into the cost of the building, and it's all due to San Francisco's mandatory ground-floor retail law.
Urban planners have long championed mandatory ground-floor retail as a key tool for creating active streets. In the 1990s, many U.S. cities started to require retail, dining, or other high-foot-traffic uses on the ground floor in order to prevent sidewalks from becoming dead zones. The idea was that retail would attract people, bringing more business activity to the city, and making neighborhoods feel more lively. In fairness, this did seem to work for a while. And in the past couple years, planners have started to change their tune.
"In today’s white-hot San Francisco, ground-floor retail has pretty good prospects, and businesses can and do make use of all kinds of spaces, from the 12- foot frontages along Hayes Street to ActivSpace on 18th and Treat Streets, which houses a thriving café in just 99 square feet. But elsewhere, ground floor space often sits empty, a planner’s aspiration that never bore fruit. [...] The cost of empty retail space is simply folded into the cost of the space upstairs."" - Designing at Ground Floor, SPUR, 2014
San Francisco's ground-floor retail requirement first appeared in the 1985 Downtown Plan, which mandated that all "C-3" commercial areas include ground-floor retail. Its explicit goal was to bring more office and retail space into the city, which admittedly made a lot of sense at the time.
"The principal section of the Downtown Plan is the Space for Commerce chapter. [...] this key section of the Plan called for various rezonings to encourage street-level activity by requiring ground floor retail…"
25 Years - Downtown Plan Monitoring Report 1985 - 2009
But what the Downtown Plan couldn't see coming was the rise of e-commerce.
In 2008, the Eastern Neighborhoods Plan extended the ground-floor retail mandate to new corridors. By this time it was becoming apparent to technologists that e-commerce would continue to grow at a rapid pace. But despite being known for our tech industry, policy leaders did not adjust to the new normal. It took a global pandemic and record-high vacancies for elected officials to realize we made rules for a reality that no longer existed.
Despite the softening retail market, the residential market stayed hot. So property developers still needed to build housing, even when ground-floor retail space was a mandatory, undesirable component. Developers aren't dumb – they knew they would struggle to find a retail tenant but also knew they couldn't change the existing laws. So they found the only way to make their buildings work: put the minimum amount of cost and effort into the mandatory retail space, write it off as a deadweight loss, and focus on the actual tenants instead.
But the boom times are over and now we have a retail supply that vastly outstrips demand, yet developers are still required to build a space that everyone knows won't be used. It makes buildings harder to finance and thus more expensive to build.
Change is hard, expensive, and sometimes illegal
Building owners struggling to fill a retail storefront have limited options, and their best options are even illegal in some parts of the city. San Francisco has strict rules about what type of business is or isn't allowed in any particular space, and no conversion of use is guaranteed by law.
In high-vacancy retail corridors, our laws often require that retail businesses fill these vacant spots, rather than let it be something else.
In North Beach, businesses are subjected to the North Beach Special Use District, which makes it illegal to convert a retail storefront into things like a restaurant, bar, coffee shop, church, school, or residence. Some office spaces, like a dentist or accounting firm, or even a real estate office would be allowed, but the law stipulates that new uses must promote "active commercial uses" – i.e. regular foot traffic… even if there's no current foot traffic due to a vacancy.
Fun fact: the North Beach Special Use District zoning prevents any new restaurant space from being created! A restaurant is only allowed to fill a spot vacated by another restaurant or bar. Bars can only replace bars.
Not every neighborhood is as conservative and change-averse as North Beach, though. The Van Ness corridor, which has 53% retail vacancy, is more permissive (and even more so now that restrictions on formula retail have been loosened), though converting vacant retail space into office space is still illegal. So why does this corridor have the highest vacancy rate in the city? There's no clear answer, but there are a few plausible theories: the cost of converting a space to a new use (think installing a kitchen in a former clothing store), alternative non-retail uses (like general office space) are illegal, and, frankly, that the corridor just isn't nice.
We can help ameliorate these issues by lowering the cost of upgrades via grants and limited tax breaks, changing the zoning rules to be even more permissive, and trying to make the street generally nicer. Van Ness has a great, high-speed dedicated bus lane, so let's make the road nicer for people once they get off the bus. How about some trees? How about cleaner sidewalks?
Make change legal again, and help make it happen
Let's consider a future where brick-and-mortar retail doesn't rebound. It's a declining market, consumer preference for online shopping has been growing steadily year-after-year, commuters may not come back anytime soon, and tourists are no longer coming to San Francisco to shop. Let it go.
We have three simple policy proposals to fix our retail vacancy problems:
Stop requiring new buildings to build ground-floor retail
Let vacant spaces become something else, only restricting high-nuisance or polluting uses
Issue grants, or give tax credits, to building owners or entrepreneurs who pay to improve their spaces
Repealing the ground-floor retail requirement is simple – just repeal SF Planning Code Section 145.5. It will immediately make new buildings more affordable to build, and stop growing the oversupply of retail space. San Diego is already trying this by temporarily repealing their own ground-floor retail requirement, and they started before the COVID retail slump.
Letting vacant spaces transform into other uses can be fairly straightforward. Lawmakers should go broad and change how our zoning codes handle allowable uses. We should make our laws permissive by default, rather than exclusive, and only restrict uses known to be a nuisance, rather than be prescriptive about what is allowed. For example, in late 2019 California lawmakers passed AB68, which allowed vacant ground-floor retail spaces in multifamily residential buildings to be converted into housing. But four years later, nobody has done it in San Francisco. Lawmakers shouldn't guess what developers or consumers want – they should let them be creative, instead.
Finally, grants and tax credits for improvements on commercial space would make it more affordable and less risky to try out a new business type in an existing vacant space. This is already being tried out in Washington, D.C., though it was only enacted a few months ago so it's too early to judge its performance.
The Office to Anything program, officially known as the Central Washington Activation Projects Temporary Tax Abatement, will support the repositioning of outdated and obsolete office space into new retail spaces, hotels, world-class office space, restaurants, and other non-residential uses by offering a 15-year temporary property tax freeze.
- The Deputy Mayor’s Office of Planning and Economic Development, Washington, D.C.
We should reward owners taking risks on new businesses, and help them out if they fail. We can use this same structure to incentivize converting San Francisco's huge supply of class C office space into more desirable space, hopefully reactivating vacant offices and bringing more foot traffic downtown.
While the causes of rising retail vacancies may be myriad and complex, the solutions need not be.
News
Anonymous benefactor funds new Mandarin immersion k-8 public school
Published July 18, 2025
The Facts
SFUSD announced that an anonymous benefactor will fund a new K–8 Mandarin immersion school opening in fall 2027, according to Jill Tucker and Ko Lyn Cheang at The Chronicle. SFUSD will partner with San Francisco State University to build a certified Mandarin and Cantonese teacher pipeline, and has tapped Liana Szeto—founding principal of Alice Fong Yu Alternative School—as special adviser to the project.
The Context
Currently, only three district campuses offer Mandarin immersion and there’s a long waitlist. Just 66 kindergarten seats are available at Starr King and José Ortega elementary schools, with two-thirds reserved for proficient speakers, despite 22 percent of SF residents with Chinese heritage. The district also runs Cantonese immersion at four elementary sites and dual-language programs in Spanish and Korean.
This announcement arrives just weeks before a school board vote on Dragon Gate Academy, a parent-led K–8 Mandarin immersion charter school backed by nearly 200 families frustrated by limited district capacity. Amid ongoing budget pressures that have prompted talks of layoffs and school closures, both district-run and charter efforts underscore the urgency to expand high-quality, multilingual public education in San Francisco.
SF to charge for Golden Gate Park parking and court reservations
Published July 18, 2025
The Board of Supervisors voted 10–1 to allow the city to implement parking fees in Golden Gate Park and introduce reservation fees for tennis and pickleball courts across the city.
Facts
On July 15, 2025, the Board of Supervisors passed two ordinances:
Golden Gate Park parking: Authorizes the SFMTA to begin charging for parking in Golden Gate Park. SFMTA still needs to determine the pricing structure, and the policy would not take effect until January 2027.
Court reservations: Allows Rec & Park to charge fees for reserving tennis and pickleball courts citywide (excluding the Golden Gate Park Tennis Center, which already has a separate fee structure). Fees will be set based on location, demand, and program costs.
These measures are expected to generate new revenue, helping maintain park services at a time when the city faces a projected $800 million budget shortfall over two years.
Both votes passed 10–1, with only Supervisor Jackie Fielder voting no.
Context
San Francisco is home to some of the best parks in the world—popular, well-maintained, and free to use. But with the city facing a massive budget deficit, we need to find new revenue sources to maintain these public spaces and the services they provide. Charging modest fees for limited amenities like parking and court reservations is a practical way to support parks and keep them accessible.
The GrowSF Take
We support these votes. Charging for scarce, high-demand resources is fair and fiscally responsible. It helps preserve services and ensures that users contribute to their upkeep.
Supervisor Fielder’s no votes show a refusal to engage with fiscal reality. You can’t close a budget gap by just saying “no” to everything.
Recent & upcoming openings
A great city is constantly changing and growing, let’s celebrate what’s new!
Brewfest 2025 (today only!)
WHERE: The Presidio Parade Ground
WHEN: Saturday, July 19, 12pm-4pm
Grab your summer parka and head to the Presidio for their third annual Parks4All Brewfest. This popular brew fest hosts almost two dozen breweries, food trucks, and live music and benefits the Parks Conservancy, which helps maintain the Presidio as a beautiful public park for all. (And, no, it’s not the Parks Alliance which has been in the news for financial trouble!)