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Despite soaring retail vacancies, luxury thrives in downtown San Francisco

A woman in sunglasses and a lavender coat walks past luxury shops on a sunny day.
A pedestrian walks by the Bulgari store in Union Square. | Source: Jason Henry for The Standard

The interior of Downtown San Francisco’s Brunello Cucinelli—the designer fashion brand favored by tech moguls Jeff Bezos and Mark Zuckerberg—is a soothing palette of taupes and creams, neutral hues that signify understated luxury without gaudy logos. 

The basic gray Cucinelli T-shirts preferred by the Facebook founder start at upward of $300, while a “tropical” wool jumpsuit will set you back nearly $7,000.

In 2021, as more down-to-earth retailers such as Marshalls, Uniqlo and DSW fled the Union Square area, the Cucinelli outpost quietly doubled, adding 2,686 square feet. The expansion allowed for the addition of an in-store bar to entertain VICs: Very Important Clients. On a recent Wednesday, the bar was topped with glass carafes of nuts, and a nearby coffee table held silver-wrapped Baci chocolates. 

“We’ll deliver that to the Four Seasons,” a sales associate could be overheard assuring a client in the next room. 

Concerns about crime and declining foot traffic in recent years have spurred a mass exodus of stores from the area around Union Square, San Francisco’s best-known shopping district. Downtown retailers from Anthropologie to Crate and Barrel to Nordstrom have shut their doors. The area has quadruple the retail vacancy rate of San Francisco overall.

Pedestrians pass a vacant storefront next to La Perla on Geary Street in San Francisco. | Source: Jeremy Chen/The Standard

But it’s a different story for the luxury sector.

A handful of high-end brands aren’t just holding on in Downtown—they are expanding. Along with luxury brands, services and restaurants that cater to a clientele with deep pockets are also opening for business. 


It’s not only Brunello Cucinelli widening its suede calfskin belt. In early 2022, French fashion house Yves Saint Laurent moved into a three-level 12,323-square-foot store in the historic I. Magnin & Co. building on the corner of Grant Avenue. The expansion came despite a string of grab-and-run robberies in which thieves made off with $54,000 worth of high-end purses. 

Last summer, luxury Milan-based fashion house Bottega Veneta expanded its Maiden Lane store, creating a more prominent entrance on Geary Street. Now 3,355 square feet, the space features concrete floors, hand-knotted merino carpet and leafy plants in vessels made by the prominent Chicago sculptor Anders Ruhwald.

Luxury retail—and luxury services—are more resilient to economic downturns than mass-market brands because wealthy customers are insulated from those ups and downs, said Neil Saunders, a retail analyst for GlobalData. 

That resilience ties into the experience of luxury shopping itself, one that is very different from the harried experience of picking up T-shirts at Old Navy or housewares at Target. 

“Luxury brands want to be a destination, a place to discover and be entertained and engage with the brand,” Saunders said, adding that more square footage helps to make spaces “more dramatic.” 

Jewelry is displayed in the window of Bulgari in Union Square in San Francisco on May 13. | Source: Jason Henry for The Standard

Celebrities and other VICs get perks like special events, holiday gifts and invites to fashion shows—not to mention drinks and snacks while shopping. 

“The experience of luxury stores is about treating the customer well,” Saunders said. “If you’re spending a lot of money, you’ll be well looked after.” 

That’s presumably what the iconic French fashion house Chanel had in mind when it paid $63 million in December 2021 for the three-story building formerly occupied by Williams Sonoma at 340 Post St. The purchase reflects San Francisco’s relatively high concentration of extreme wealth: It’s home to the third-highest number of billionaires of any city in the world. 

Chanel has taken a similar approach to ultra-valuable retail in other markets where it has a presence. In 2015, the company snapped up an 11,500-square-foot building at 400 N. Rodeo Drive in LA for a record $152 million. The year before, the company had also purchased a nearly 4,000-square-foot retail space on New York’s Madison Avenue—widely regarded as the most valuable retail market in the U.S., if not the world—for $123.8 million.

Representatives for luxury brands declined to comment for the Standard on their real estate purchases or long-term strategies. 

There are other signs that retailers catering to the ultra-wealthy are taking advantage of the rare availability of real estate in Downtown San Francisco.

“For the majority of my career, the market has been so tight retailers can’t find the space they’re looking for,” said Colliers broker Julie Taylor, who has worked in commercial real estate since 1989. “It’s a really good time for retailers to make a land grab.” 

Taylor has seen the trend of high-end retail investing in Union Square—a long-established pattern—accelerate since the pandemic. 

“Luxury retail is doubling down on its presence in Union Square,” she said. 

A man in a suit walks through a high-end boutique with displays of luxury goods and attentive staff.
Shoppers and employees stand inside the Hermes store on Grant Street. | Source: Jason Henry for The Standard

Other retailers slightly down the food chain are seeking to piggyback on the enduring strength of luxury brands. Banana Republic—the San Francisco-based business-casual clothing brand that saw its net sales drop 47% in the first quarter of the pandemic—closed its Westfield San Francisco Centre outlet earlier this year. Now, it’s reopening its flagship store next to Chanel on Geary in an effort to reposition itself as a “premium lifestyle brand.” 

“They pounced upon an opportunity to spotlight and elevate their brand,” Taylor said.  

A similar dynamic is at play with the proliferation of high-end watch and jewelry stores around Union Square. In November 2021, Swiss watch seller Omega opened a flagship outlet at 103 Geary St., near Hermès and Dolce & Gabbana. Luxury French jewelry brand Van Cleef & Arpels snatched up a lease in 2022, also on Geary.

Soon, there will be not one but three luxury watch stores to choose from on Post Street after Eric Mendell, the co-owner of Burlingame-based Kerns Fine Jewelry, leased two storefronts at 255 and 259 Post St. to sell Rolex and Patek Philippe watches starting in 2024. Breitling, another high-end timepiece purveyor, is opening in the former Johnston & Murphy space, also on Post Street. 

A velvet rope is posted outside Maison Goyard on Grant Avenue. | Source: Jeremy Chen/The Standard

“Union Square is one of the most iconic shopping districts in one of the most iconic cities in the world,” Mendell said by way of explaining his decision to set up shop there. He’s confident that the string of upscale timepiece outlets will attract shoppers to the block. 

A Tale of Two Markets

Retailers are also clinging to a silver lining in the form of recent numbers showing tourism has been roaring back in the city. 

Union Square has enjoyed a comeback since the bleak days of the pandemic, with a 22% jump in foot traffic since last year. Visitor spending is also expected to continue to grow in 2023, up from the $522 million in tourism-generated fees and tax revenue delivered to the city last year, according to a report by the city’s official visitor bureau, San Francisco Travel. 

Visitors better be ready to spend when they get here. 

Mass-market clothing retailers like the Gap, Uniqlo and Nordstrom Rack have left the Union Square area one by one, leaving everyday shoppers with little to choose from. The east side of Powell Street between Ellis and O’Farrell—a major tourist stretch with a cable car line—is currently so papered with “for lease” signs that only a single Swatch store remains open for business on the long block. 

Luxury retail will also have a luxury service industry backing it. The rooftop restaurant Chotto Matte, which could end up being the largest restaurant in San Francisco, is opening in September. The exclusive event space Convene recently launched its first San Francisco location, and the Ligurian restaurant Corzetti—which will serve breakfast, lunch and dinner—opened in August in Union Square. 

Customers shop at the Nordstrom at San Francisco Centre in Downtown San Francisco on Sunday, the department store's last day. | Source: Jason Henry for The Standard

Hot 8 Yoga, a luxury chain of yoga studios frequented by celebrities like Jessica Alba and Russell Simmons, opened its first San Francisco location a month ago in Downtown, two blocks from Union Square. 

It’s a high-end oasis bookended by vacant retail storefronts, an empty Loehmann’s down the street reminding passersby of just how long retail wounds can take to heal (that store closed back in 2014 and is still clad in plywood while waiting for its next iteration). 

But Hot 8—where a single yoga class costs $37—is the opposite of the designer-brands-for-less Loehmann’s. For that price, clients get towel service, deluxe toiletries in the showers and cool eucalyptus washcloths. And Hot 8's managers don't seem bothered by the gritty blocks surrounding the luxury yoga studio. 

Nelly Romo, the assistant manager of the San Francisco studio, said the company picked Downtown for its first San Francisco location because it’s centrally located, with many tech workers and young adults. Hot 8 had long wanted to open a studio in San Francisco because of the city’s active fitness and yoga community, she said. 

“It was scary at first,” Romo said. “But it was also an opportunity to build something from the ground up.” 

Julie Zigoris can be reached at