San Francisco’s downtown central shopping district has become a tale of two cities, with retailers from department stores to drugstore chains shutting down as luxury stores quietly keep growing.
As Bloomingdale’s and Walgreens began 2025 by surprising residents and officials with announcements of major store closings, a family-owned local jeweler opened a new store in Union Square. Yadav Diamonds and Jewelry launched a showroom this month at the corner of Grant Avenue and Post Street, a prime corner location punctuating a stretch that’s increasingly populated by the high-end European names favored by tech billionaires and rap artists.
The sleek, seven-story building at 170 Grant Avenue, where Yadav said it recently signed a 10-year-lease to occupy 3,425 square feet on the fifth floor, also houses a Dior store on the ground level. Well-heeled shoppers need only walk a few feet down Grant to peruse such brands as Cartier, Dolce & Gabbana, Valentino, Hermes and Fendi.
Yadav has been in business in the city since 1983, operating for many years in the city’s less prominent South of Market Street district. Yair “Jim” Yachdavig called the family “big believers in the Union Square neighborhood,” adding that they were “excited to be a part of this flourishing downtown San Francisco area.”
The area may hold enduring cachet for elite brands, but the overall numbers paint a different picture. The retail vacancy rate across Union Square, the city’s premier shopping district, soared from 9% in 2019 to roughly 22% today, according to CoStar data, making it one of the hardest hit neighborhoods in San Francisco following the pandemic. That's more than five times the nationwide vacancy rate of just over 4%.
The big department stores that once drew shoppers from around the Bay Area to Union Square aimed to make shopping convenient for the middle class, but in recent years, few regular San Franciscans shop there. The result is that "for lease" signs dot the storefronts of downtown, a sign of financial distress in an area that has yet to regain the bustle of office workers that filled the streets before the pandemic.
Filling the gaps left behind by everyday retailers are stores that cater to foreign tourists and deep-pocketed locals — the San Francisco of private social clubs and appointment-only shopping.
The situation in Union Square is an extreme version of a nationwide shift among retailers, said Neil Saunders, a retail analyst and managing director at GlobalData. Luxury brands are "in a good place," he said in an email to CoStar News. "They want a presence in high-profile locations."
On the other hand, "middle market retailers are having a tough time in San Francisco."
Bleeding stores
Brands that cater to the super wealthy have mainly seen the emptying out of Union Square’s iconic storefronts as an opportunity to spread out, said veteran Colliers broker Julie Taylor, who has been working in the neighborhood since 1989.
“All the luxury retailers who have been in San Francisco for 20-plus years have used the last five to expand their footprints,” said Taylor.
The latest crop of designers that have moved in or expanded nearby in recent months include French leather goods maker Maison Goyard, which in November said it was doubling its space at 118 Grant Ave. by taking over the former Montblanc store next door. In the spring, Italian jeweler Bulgari plans to move into new 9,000 square foot digs at 200 Grant Ave., per a lease signed in 2024, said Grosvenor, the owner of the buildings at 170 and 200 Grant St. as well as 245 Post Street, where lavish clothing brand St. John Knits recently inked a deal to occupy 1,500 square feet.
Citing a larger effort to streamline operations in a difficult climate, the parent company of Bloomingdale’s announced earlier in January that its five-floor store on Market Street — the brand’s largest after its New York flagship — would close its doors in a matter of months, shuttering the last anchor and by far the largest tenant at the half-empty San Francisco Centre mall, which has bled occupants in recent years.
Nordstrom’s flagship store at the mall closed in 2023 after 35 years in business. Other stores — including Adidas, American Eagle, J. Crew, Madewell, Aldo and L’Occitane — have since followed suit as the mall becomes increasingly deserted.
Much of Union Square is also now dominated by empty storefronts, as global forces such as e-commerce have combined with local concerns about rising crime and disorder, forcing the closing of businesses ranging from locally owned sellers of t-shirts to national department store chains. Macy’s Inc. announced in early 2024 that it would close its Union Square store but did not say when.
The contrast isn’t a coincidence. The departure of stores such as H&M and Forever 21 — both of which closed flagship stores in Union Square in recent years — has freed up prime real estate for brands that do not rely on foot traffic. "It's absolutely a chain reaction that has momentum," said Taylor, who has watched brand names that cater to the very rich follow one another in expanding or opening new outposts on certain blocks that have become synonymous with prestigious labels.
Take Brunello Cucinelli, the designer brand that makes the $600 grey t-shirts that are the preferred uniform of Facebook mogul Mark Zuckerberg. In 2021, at the height of the pandemic, as more down-to-earth retailers such as Marshalls, Uniqlo and DSW shuttered, the Cucinelli outpost at 114 Grant Ave. quietly doubled. The expansion allowed for the addition of an in-store bar to entertain VICs, or Very Important Clients, with touches like glass carafes of nuts and silver-wrapped Baci chocolates.
Another iconic brand, Chanel, paid $63 million for a three-story building at 340 Post St. as part of a move by the French fashion house to open new locations around the United States after the onset of the pandemic, while other, more everyday retailers struggled.
Luxury brands have seen increased demand nationwide, as retail sales in the category hit $75 billion in 2023, surpassing pre-pandemic levels. They are expected to grow to $83 billion by 2028, according to a report by JLL.
Stores such as Kerns Fine Jewelry, which opened on Post Street selling Rolex and Phillip Patek watches in 2023, is open only by appointment, which some analysts say is a growing trend among upscale retailers, especially in downtown San Francisco, where concerns about theft have been in the forefront in recent years. Several brazen smash-and-grab robberies of stores such as Louis Vuitton and Dior have made national headlines, and San Francisco 49ers rookie wide receiver Ricky Pearsall was shot and seriously wounded in an attempted robbery in the square in September.
The Saks Union Square store at 384 Post St. said in mid-2024 that it would switch to scheduled shopping, the first standalone store to do so.