Washington, D.C., ranked as the top retail market in the nationfor the second consecutive year due to its compelling demographicsand reliable economic engine fueled by the public sector. Roundingout the top five were Orange County, Calif., (No. 2), San Diego(No. 3), Boston (No. 4) and Fort Lauderdale, Fla., (No. 5). SanFrancisco came in at No. 6, down one spot from last year, whileOakland and San Jose, respectively No. 8 and No. 12 last year,dropped to No. 14 and No. 19 in this latest ranking.

Cleveland came in at the bottom of the index, ranked No. 38 forits high vacancy rates and a lackluster economic outlook. Las Vegasmade the biggest jump, climbing 10 spots to No. 13 for having thehighest expected employment and household growth rates among the 38markets surveyed. Seattle fell the farthest, dropping 18 spots toNo. 30, primarily due to economic and employment setbacks.

San Francisco's ranking is based on strong personal income andthe second-highest per capita retail sales figure of the marketssurveyed. The report says San Francisco's vacancy rate is expectedto remain relatively stable through 2003, hovering around 5.9%after rising through 2002 and early 2003. Asking rents in theregion are forecast to rise by 1% this year to an average of $30.02per sf by year's end. "The strong purchasing power of Bay Areaconsumers has helped maintain a healthy retail sector despiteoverall weakness in the economy," says Jeffrey Mishkin, regionalmanager in Marcus & Millichap's San Francisco office. "Unlikethe office and apartment sectors, retail rents never skyrocketed,so they haven't experienced a subsequent major correction."