San Francisco’s Union Square remains the most expensive retail district in the region and is the third most expensive district in the Americas, according to data from Cushman & Wakefield’s Main Street Across the World report. Rents in Union Square rose to $685/SF this year compared to $650/SF last year.

Union Square’s vacancy rate stands at 5%, Cushman & Wakefield says. Vacancy is about to rise with Macy’s consolidating its store into 170 O’Farrell St. It will sell its men's store by January and vacate the 263k SF store over the next few years.

Cushman & Wakefield expects rents citywide to flatten heading into 2017, but that won’t stop investors from putting significant money down.

"Despite the high cost of entry into San Francisco, retailer, food and hospitality demand remained high throughout the year," Cushman & Wakefield San Francisco Retail Service Group managing director Rhonda Diaz-Caldewey said. "Rents increased in early 2016 and have leveled off towards the second half of the year."

Mid-Market is emerging as a competitive alternative to Union Square, according to Cushman & Wakefield's report. Cheaper rents and several multifamily developments in the neighborhood have helped attract retailers. A new 250k SF retail project is about to be delivered in Mid-Market.

Jackson Square is also becoming a retail hotspot focused on Millennials and luxury retailers. The area is exempt from the city’s anti-chain laws as well. Retailers that have moved into this neighborhood include Isabel Marant, Jake, Shinola, Filson, A.P.C. and Guideboat.