Office space vacancies in the city have dropped below 35%, and activity in San Francisco is back to pre-pandemic levels.

Data shows people are coming back to the city and businesses are opening and expanding in San Francisco.

Commercial real estate brokers at Blatteis Realty are calling it the gold rush for business, saying they’re making more deals now than they have since before the pandemic.

"It’s been exceptionally busy with leasing stores and selling business," said Jeremy Blatteis of Blatteis Realty. 

Although Union Square is still crippled with vacant storefront spaces, Blatteis said new deals are coming, including on bigger spaces like the former flagship Banana Republic on Sutter.  

"People see what Union Square was and they see what it could be again," Blatteis said.

Blatteis recently signed a deal with Just for Fun, a toy store opening its fourth location in Union Square come September.

"If you have been here and you walk these streets everyday, you’ve seen a real difference and that has really put a charge in our battery in moving forward and expanding," said the store's general manager Jacob Henson.

Henson credited Mayor Lurie for cleaning up the streets and helping the city blossom.

"You can just see the city returning to just a vibrant space to be in," said Henson.

"We talk to all sorts of prospects and tenants and that is the general consensus, that people are feeling safer," said Blatteis.

A realtor from Avision Young said it's not just the cleaner streets, but also a spillover effect from Jackson Square and the Mission Bay, where AI companies have flocked. They said half their deals in Union Square have been tech companies.

This all comes after Nintendo opened a store on Powell Street, choosing San Francisco over hundreds of other locations.

"What we’re seeing is retail on the upswing, it’s improving," said Blatteis.

According to researchers at JLL, citywide office leasing is back up to pre-pandemic levels, with more than 9.2 million square feet of office space leased.

JLL reports that in 2023, there were nearly 50 leases in the city with AI companies. In 2025, over 200 AI companies are leasing San Francisco property. 

JLL also said using cell phone data, it's been able to quantify a 28% increase in the number of people in downtown SF on weekdays as of June 2025, compared with January 2024.

The city’s entertainment zones and large-scale events like Outside Lands and the recent Dead and Co concerts are also bringing more people to the city, which Mayor Lurie has said is a focus of his.

"It brings a lot of musicians and people out here and they’re seeing these stores they haven’t seen before and it gets them out here," said Blatteis.

Executive Director of San Francisco’s Office of Economic and Workforce Development Anne Taupier said in a statement, "We are on a new trajectory," adding that Mayor Lurie's focus on improving city streets, hosting live events, "combined with San Francisco’s status as the unrivaled epicenter of the AI revolution, are fueling our comeback."

Quaint Maiden Lane near Union Square was a hot spot in July for Colton Hanley, a senior vice president at the real-estate services firm Avison Young, who helped three tech companies sign office deals in three buildings along the narrow, historic road.

“San Francisco is back, and so is Maiden Lane,” Hanley exulted on LinkedIn.

The succession of leases, totaling 15,000 square feet, apparently bolstered Hanley’s belief that The City — and areas close to Union Square in particular — are on the upswing.

The deals added to a series of developments, including new retail openings, that have fueled a growing sense of optimism about The City’s historic shopping and hospitality neighborhood.

One of the newest arrivals promises to be a toy store in a highly symbolic spot just at the end of Maiden Lane that was formerly occupied by Jeffrey’s Toys, the store at 45 Kearny St. that served as an inspiration for the Pixar movie “Toy Story” before closing in 2024 after about 85 years in business.

The new tenant is San Francisco-based Just For Fun, which is planning to open its fourth toy and variety outlet in the space in September. Owner Michelle O’Connor said the location was a natural fit and she wants to contribute to the resurgence of downtown that she thinks is gathering steam.

“We can see it coming back,” O’Connor said. “Things are getting busier, and we can also see that people are believing in it again.”

Jeffrey’s Toys at 45 Kearny St. in San Francisco, seen on Monday, Jan. 29, 2024,  closed Feb. 10, 2024. The storefront now has a new tenant. 

Jeremy Blatteis of Blatteis Realty Co., which brokered the deal, said he thought it was “cool” that the store would once again sell toys.

“It used to be a toy store, and now it’s going to be a toy store again,” Blatteis said. “We’re back!”

Like other real-estate professionals working around Union Square, Blatteis credited Mayor Daniel Lurie with improving the area’s prospects by leading an improvement in street conditions.

Among other measures, in February, newly elected Lurie announced the creation of a “hospitality zone” police task force to improve safety downtown from the convention halls of Moscone Center to the shopping hub around Union Square.

“Daniel Lurie is doing a good job. He’s really cleaning up the streets,” Blatteis said. “We’re really glad he’s mayor, and Union Square’s coming back under his watch.”

Just around the corner at 58 Geary St. from the prospective toy store, the men’s-clothing retailer John Varvatos on Aug. 2 celebrated the opening of its new store, a venue that replaced its former location in the troubled San Francisco Centre mall at Fifth and Market streets.

Meanwhile, the luxury audio-equipment seller Bang & Olufsen is preparing to open a store in October one block away at 146 Geary St., according to the company’s website.

The space is in a structure built in 1907, where Hanley has also signed a small tech startup called Kaizen to take 2,500 square feet. Kaizen, which uses the address of 149 Maiden Lane on the other side of the building, is preparing to move in later in August.

Ken Acquah, a co-founder of the fledgling company, which uses artificial-intelligence technology to automate routine business tasks such as filling out forms, said he appreciated the character of what will be his company’s first office, as compared to other “cookie-cutter” offices in large commercial buildings in the downtown area.

“It feels very unique,” he said.

Featuring copious exposed brick and a conference room with large windows looking out onto the Neiman Marcus department store and a large, old “Britex Fabrics” sign, the space was already fitted out with a kitchen and desks.

“This office stood out for its aesthetics,” said Acquah’s co-founder, Michael Silver.

The four-person company, which has raised $4 million in venture capital, previously operated out of Silver’s apartment. Silver, who said he met Acquah when they were studying at Massachusetts Institute of Technology, said the neighborhood’s access to transit and its proximity to other startups were also selling points.

Hanley said that demand for smaller, so-called “creative” spaces of 10,000 square feet or less has been relatively strong in the downtown area. One result has been that prospective tenants have increasingly widened their searches to include neighborhoods farther from the central business district, he said.

Creative spaces do not resemble typical professional-services offices — they can feature exposed ceilings, exposed brick, polished concrete and wood flooring, Hanley said. An added benefit in the Union Square area for tenants in recently signed deals has been lower prices and more flexible lease terms, he said.

Despite its attractions, the Union Square district has been marked in recent years by a large number of retail vacancies, though it has maintained a relatively strong roster of luxury brands.

Samantha DuVall Bechtel still remembers sipping on glasses of bright red Shirley Temples as a child inside her father Sam DuVall’s San Francisco restaurant, Izzy’s Steaks & Chops. The wide-eyed girl would lovingly observe her father greet his guests with a firm handshake before escorting them to a seat inside the dimly lit steakhouse. Decades later, now as the managing partner of the DuVall Family Hospitality Group, DuVall Bechtel is gearing up to reopen Izzy’s after an extensive remodel that’s given the nearly four-decade-old restaurant a fresh look and a revamped menu.

The 38-year-old Marina District restaurant is set to reopen for dinner service Wednesday with a new fine dining chef after an extensive remodel that kept the restaurant closed since October 2023. Once the curtains lift, guests will set foot inside the two-story, 4,800-square-foot space and find a more open dining area that also features private dining booths, a refurbished bar and a wrap-around mural in the dining room that pays homage to the city’s iconic landmarks and its scandalous Barbary Coast past.

“A core value my father instilled was to make every guest feel part of the Izzy’s family, and we’re committed to carrying that tradition forward,” DuVall Bechtel told SFGATE.

The “KFC of Guatemala” Pollo Campero has been drawing long lines at their Mission Street location for a decade. But the lines shouldn’t be so long anymore, as the SF Planning Commission just approved the restaurant’s request to expand and take over the neighboring address.

When the Guatemala-born fast-casual chicken dinner chain Pollo Campero opened at Mission and 23rd street in December 2012, the chain was already a Central American sensation, with hundreds of locations across Mexico, Guatemala, and El Salvador. Now more that 12 years later, it’s still not unusual to see lines out the door at that Mission Street Pollo Campero. And the cult-hit chicken place is so popular among travelers between the US and Central America that Pollo Campero developed special airline bags so travelers could take large amounts back home without stinking up the plane.

We may not see lines outside that Pollo Campero much longer, because it's about to double in size. On Thursday, the SF Planning Commission unanimously approved Pollo Campero’s request to take over the vacant next-door 2744 Mission Street location, which has been unoccupied since the Uforia Studios fitness studio there closed in 2022.

The Planning Commission also approved a complete revamp of the Pollo Campero’s exterior, making the combined spaces into more of one singular space. Both addresses are technically part of the same building, owned by Blatteis Realty subsidiary Mission Blatteis Holdings.

Here’s what the location looks like now. The Pollo Campero is currently 3,759 square feet, but with the expansion, it will be 6,326 square feet. The cornice on the vacant spot will be removed, and a new stucco exterior will give both spots a consistent height.

Looking at the proposed interior plans (the beige area is the new space), the expanded Pollo Campero will have 106 seats. They’re building a new extra kitchen in the area that’s currently the restaurant’s point-of-sale and cash register. There will be two additional bathrooms added, though most of the new space will just be used for seating.

Per documents submitted to the Planning Department, “another ten staff members” will be hired on once the renovations are complete.

Michelle O’Connor thought she was taking a risk when she opened a second location of her Noe Valley shop, Just for Fun, in the Marina in June. She never expected that, mere months later, she would open a third store on Fillmore Street. 

“It was sooner than I wanted — I could have waited another year,” she admitted. But the location and price felt too good to pass up. 

At a time when many retailers and restaurateurs are calling it quits on the city, leading to record-high vacancy rates last quarter, a swath of business owners have decided to double — or triple — down, thanks to what they describe as a renter-centric commercial real estate climate. 

“SF is going through this renewal and regeneration at the moment,” O’Connor said. “These opportunities won’t be around forever. I’m investing in San Francisco being back on the up.”

She isn’t alone: In the year to June 30, the San Francisco Office of Small Business assisted 261 owners who wanted to expand versus 197 in the previous fiscal year. (Notably, the office brought on a permit specialist and a leasing specialist in the past two years.) During the same period the office also dispensed 14 “Storefront Opportunity” grants of $50,000 to businesses adding a location.

O’Connor, who didn’t receive grant money, said she and her husband are committed to building community and healthy commercial corridors in the city where they’re raising their two children. 

“San Francisco had a tough time through Covid — a lot of businesses didn’t survive, and there’s a void,” O’Connor said. “It’s sad to see businesses go, but someone’s got to step up and fill that void; otherwise, we wouldn’t have anything. So I guess that’s why I’m trying my luck at it.”

Buying the dip

For Outta Sight pizzeria founders Eric Ehler and Peter Dorrance, opening a new outpost felt like a way to add stability to their business and take advantage of the fact that their Tenderloin shop regularly hits capacity. They’re set to debut a location straddling the Chinatown and Financial District border in November.

“It was a great deal,” Ehler said of the space, which the duo found last year. The current market gives entrepreneurs ample room to “negotiate” and “be diligent” to find a good landlord, he added.

“There’s so much empty retail space and commercial space out there, and there’s so much that will hit the market soon too,” he said. “Not to be disheartening, but this feels like a time for the change in guard.”

To be sure, entrepreneurs like Ehler and Dorrance are moving against a larger trend: San Francisco’s retail vacancy rates hit a new high this quarter at 7.9%, according to Cushman Wakefield’s Kazuko Morgan. But that means business owners looking for leases can find gems. “There have been a lot of people sitting on the sidelines,” Morgan said. “But the people who recognize that it’s a tenant’s market are taking advantage and doing deals.” 

San Francisco will eventually rebound, she predicts, and savvy businesses are locking down leases before that happens. She got a glimpse of the potential future on a recent trip to New York City, where she saw that retail spaces were getting multiple offers and increasing their rents.

“Not so long ago we were in a 3% vacancy here,” she said. “It’s not always going to be this way in San Francisco.” 

‘Really good’ prices and help from the city  

Britney Lamb, founder of the Yoga Shala, remembers the pain of hunting for her first studio in 2022. Her real estate agent kept showing her spaces that cost $10,000 a month, way over her budget. She ended up scoring her Sunset studio, which hadn’t been actively listed, by contacting the building’s owners directly.

The process the second time around felt amazingly simple in comparison: She found the perfect location in the Richmond “within the first three minutes” of searching on Craigslist, Lamb recalled with a laugh. “The price felt really good,” she added. She hopes to have its grand opening at the beginning of December. 

Most areas of San Francisco have seen sales tax revenue plummet since 2019, but Lamb is bullish on both the Sunset and the Richmond.

“I do think that there are people in the neighborhoods of San Francisco who aren’t going anywhere — this is their home and their community,” she said. “I think there’s a need for community and places for people to congregate.” 

While obtaining the right zoning for her new space — previously occupied by a law office — entailed “several curveballs” and significant stress, she credits the city with helping her through it. 

Sarah Dennis Phillips, executive director of the Office of Economic and Workforce Development, said expanding businesses have access to “one-on-one business counseling, leasing, and permitting help, as well as connections to financing and grants.”

For example, the city’s First Year Free program waives permit, license, and business registration fees for an entrepreneur’s inaugural year. One recent recipient, Ismael De Luna, opened his second storefront in the Castro in September: a wellness center, Taboo, which complements his other business, Healing Cuts. 

The Taboo space “had been dark for many years,” he said, which allowed him to access other city grants geared toward filling empty storefronts. “I knew I had what it takes to bring light to an environment that was so depressing,” De Luna said. “The city is thirsty for progress.” 

‘Now is the time’

De Luna’s advice for other entrepreneurs considering expansion is to dive in headfirst. “When you have a vision, nothing is impossible,” he said. “There’s always a solution for any problem that may exist.”

Outta Sight’s Ehler also advocates taking risks, advising business owners to ask for help, hire good people, and have fun.

“You don’t have to have a million-dollar build-out,” he said. “You just need to have good service and a good product. That’s what has been working for us.”

Just for Fun’s O’Connor echoes that: “My advice would be: Now is the time.”

Blatteis Realty is pleased to announce our own Lucia J. Yoon has sold this Japanese Restaurant for $4,000,000 million in the heart of San Jose. Congrats Lucia and Keep up the good work!

A burgeoning San Francisco toy store, Just For Fun, has secured a rare and larger-than-typical space on a high-end stretch of Pacific Heights for its third store.

The space at 2185 Fillmore St. was home to toy and children's clothing retailer Mudpie, which has moved down the street to 2121 Fillmore. It marks the second new store for Just For Fun proprietor Michelle O'Connor, who acquired the business from its longtime owners in 2021.

Blatteis Realty brokered the long-term lease deal but declined to comment beyond confirming their involvement. Per a listing brochure, the space includes a 3,200-square-foot ground level, a 3,200-square-foot basement and a 1,200-square-foot mezzanine.

"We've had people walk by this space describe it as the 'jewel in the crown of Fillmore Street,'" O'Connor said in a recent interview. "With this neighborhood, we maybe wouldn't have had the opportunity during 2019 peak times."

O'Connor opened a smaller 700-square-foot store at 1957 Union St. this June, adding to the original location at 3982 24th St. in Noe Valley.

In the Upper Fillmore O'Connor sees an opportunity for a declining breed in San Francisco: the large urban toy store, which took another hit with the closing of downtown stalwart Jeffrey's Toys earlier this year. She said that Pacific Heights offers its share of fresh tourist traffic and more accessible rents post-Covid.

Just For Fun & Scribbledoodles, originally established in 1987, sells toys, gifts, cards, art supplies and homeware. The store also hosts pop-up events and a Pokémon club that provides related merchandise discounts and connects players for trades and battles.

O'Connor, originally from the United Kingdom, moved to the Bay Area with her family in 2019. With inspiration from her eight-year-old daughter and four-year-old son, she became intrigued by the prospect of growing their neighborhood's local toy store. She formally acquired the business in August 2021.

Just For Fun expects to open its Fillmore store on Oct. 1, in time for the crucial busy holiday season.

"We're going to make the space beautiful for Christmas," O'Connor said. "We make it our business to be magical."

A Hawaiian vegan ice cream brand slinging acai-bowl-esque banana soft-serve will make its first splash stateside in San Francisco.

Banan (also spelled Banán) began as a food truck collaboration between childhood friends at the base of Diamond Head trail in Oahu, and has since grown to three locations across Honolulu. The company confirmed on Thursday it's readying to soon add its first continental U.S. outpost: a cozy 700-square-foot spot at 3862 24th St. in Noe Valley.

The store plans to open in the spring, the company told me this week. It's currently putting out fliers for a store manager.

Blatteis Realty Co. represented the space in a recent listing on behalf of the property owner, a Novato-based trust associated with the Szeto family.

Blatteis Realty is proud to announce that 501 Divisadero Street has been sold for the first time in over 38 years for $4.7M. Lucia J. Yoon and Jeremy Blatteis represted the Seller in this transaction

Adam’s Grub Truck, a comfort-food truck that has been rolling around San Francisco, from SoMa SOMA StrEat Food Park to Spark Social to the Bayview, since 2011, has landed its own brick-and-mortar store where Valencia Subs closed earlier this month.

Adam Lee called the new location “everything that I’ve been hoping for,” and said his main goal is to make people happy with his culinary creations. His partner, April Boquiren, said she has been asking customers during their first week what else they want to see on the menu.

“In the little time that we’ve been here, it’s like, the culture is so diverse, and the people are so welcoming,” Boquiren said.

For now, they sell an enhanced version of their food truck menu: Louisiana-inspired dishes like shrimp po’boy sandwiches, Asian slaws and rice bowls, and carnival-inspired desserts, like funnel cake fries.

The new restaurant also stays open late — until midnight on Fridays and Saturdays — which Valencia Subs owner Frankie Lee said should help liven up the block. Lee, who coincidentally shares a surname with his successor at 1136 Valencia St., said he is looking forward to eating at the new restaurant.

Lee, who along with his sister also owns popular Irving Subs and Sunset Subs in the Sunset District, said he sold the location at the beginning of August after some time struggling to find reliable help at the Mission sandwich shop location, which he first opened in 2021.

“We’re running thin, we’re a family-owned business, and it was hard to manage from so far away,” Lee said.

Plus, Lee said, he’d hoped more people would be looking for jobs coming out of the pandemic, but that was not the case: When advertising a job opening, he’d receive a tiny fraction of the resumes that he used to get in 2019.

“We loved our experience there. It just sucks that we never could fully put all the time we wanted to there,” Lee said.