RCA in the commercial property press:

San Francisco Retail Waiting Out Recession

California Real Estate Journal reports: It is that scenario that often gives San Francisco an extra layer of protection while metropolitan areas without thriving tourism industries are weathering the recession. During milder economic downturns, the city's retailers can often offset the downturn of domestic spending by continued reliance on the international shopper, Portugeis said.

"It gives us somewhat of an immunization when the surrounding areas are crumbling because the domestic shopper just stopped shopping," Portugeis said.

So when the intake of international dollars slowed during the winter, retailers were hit by a double-whammy, Brownell said. In other downturns, such as the most recent following the dot-com bust and Sept. 11 attacks, the losses came much more gradually.

"This is much more severe," he said. "They've fallen, like, 60 percent. You don't know what to do at that point."

The losses in revenues have led to difficulties in keeping up with lease payments, forcing building owners to fall behind on their mortgages. According to a recent study by Real Capital Analytics, San Francisco has $1.15 billion in distressed retail properties - more than the city's combined value of distressed office, hotel, apartment and industrial properties.

Union Square rents that a year ago would have hovered around $600 per square foot are now closer to the $300 to $400 range, Brownell said. And owners who have been forced to consider nearly across-the-board rent reductions or deferrals suddenly have less cash to pay their bills - particularly those who bought at the market's peak.

"Some of these guys bought these properties right at the height of it," Brownell said. "That's trouble."

Properties aren't changing hands as frequently either. During the 12-month period ending in April, less than 40 percent of the retail properties offered for sale in the city were sold, according to Real Capital Analytics.

"It's just thrown everyone for a loop," Portugeis said. "People are having a real rough time."