Published on Wednesday, June 17, 2026
Access our latest property investment summary by completing the form below.
Vacancy in those markets remains high compared with other cities in the state, but spending strength continues.
JLL's California Retail Outlook for 2026 finds that California is a global economic powerhouse, marked by meaningful challenges and growth opportunities.
Chris Wilson, JLL national agency retail lead, told GlobeSt.com that while demographic shifts, elevated construction and labor costs and entitlement hurdles have created pressure across the market, the state's core consumer hubs—particularly Los Angeles and the San Francisco Bay Area—continue to demonstrate exceptional spending strength.
"San Francisco's recovery is accelerating, driven by renewed attention to public safety, increased office re-occupancy, and rising demand for urban living," Wilson told GlobeSt.com.
"In the Los Angeles region, suburban markets remain vibrant, with new development activity taking shape in the Inland Empire and North Los Angeles County."
San Diego Has Lowest Vacancy Rate
Retail vacancy rates across the state range from a low of 4.6% in San Diego to a high of 5.9% in Sacramento.
In San Diego, the rate ticked up slightly in Q1 2026 due to negative net absorption in general retail and power centers — but limited new supply has kept availability in check.
The San Francisco Bay Area maintained a 5.2% vacancy rate. This region saw its first quarter of positive net absorption in over a year in Q1 2026, signaling early market stabilization.
In Los Angeles-Orange County, vacancy rates rose to 5.5%, up from 5.3% at the end of 2025. This spike was driven by deeply negative net absorption as retailers continue to right-size their footprints.
Sacramento's vacancy rate edged up from 5.7% at the end of 2025, though it remains well below historical highs, with a broadly balanced supply-and-demand market.
Rent Highest in Coastal Regions
Rental rates are highest in the Golden State's coastal regions, which have also seen modest growth, while inland markets like Sacramento have plateaued.
Los Angeles-Orange County commands the highest average direct asking rent at $37.57 per square foot NNN. However, growth has flattened, reflecting a 0.3% year-over-year decrease as landlords adapt to softer occupancy.
For the San Francisco Bay market, rents reached $37.18 per square foot NNN, a 1.3% year-over-year increase. Growth is supported by a sharply contracting construction pipeline and low vacancy in well-located neighborhood centers.