Consider the marketing language of the Mission’s newly opened mixed-use developments:
“Indie boutiques, avant-garde residences and a lively arts scene distinguish the new commerce of the area,” reads the brochure of the newly-built 1515 15th Street project.
According to its website, Vara at 15th and Mission is “a chic retreat located in one of San Francisco’s most desirable neighborhoods.”
“A balanced blend of urban living and comfortable luxury, rising above the rest” is promised at the condominiums at 19th and Valencia.
Yesterday, we looked at the economics and regulations creating challenges to fill the commercial spaces at new mixed-use developments. But there are also other factors at play when brokers select a commercial tenant in the ground floor of luxury housing. To borrow a favorite term of Silicon Valley: brokers are looking for a commercial tenant that’s a “culture fit.”
The tastes and lifestyles of the tenants who can afford the Mission’s high-cost condominiums on the top floors play a significant role in determining what businesses get leases for the bottom ones.
“We want something our residents will enjoy and use,” says Kevin Chin, the commercial broker at Vara, which has three vacancies. For one of the spaces, Chin is trying to sign a deal with a restaurant or upscale lounge, something that he hopes will be “a destination.”
For developers, finding a business that’s the right combination of “chic,” “lively,” “urban,” and “luxury,” means creating a commercial space that’s left fairly empty and requires a lot of buildout. It’s a blank canvas to be filled in by a future business tenants—but as realtors are swift to remind you, not just any old tenant.
Devil in the detailing
For nearly two years since it opened, 411 Valencia, a 16-unit mixed-use development at Valencia and 15th Street, had two commercial retail spaces vacant on its ground floor. The ultra-modern Samovar Tea Lounge with its minimalist design and futuristic brewing machines opened this month in one of them. Acacia, a high-end, carefully-curated home décor store opened in the other.
The refined aesthetics of the two shops seem like a perfect fit for the building’s residential marketing copy, which describe the project as a “hip and exciting community of homes.” It probably also didn’t hurt in the deal-making that the two shops are experienced retailers with existing strong businesses—Samovar has three other San Francisco locations and Acacia has previously sold its wares at the boutique Aggregate Supply further down Valencia Street.
Sabrina Haman, a business development coach at Mission Economic Development Agency (MEDA), says that in trying to find retail space for small businesses she’s run into brokers with stringent aesthetic demands.
“They want the look of the store to be trendy,” says Haman of commercial spaces in new developments.
A peek into many new commercial vacancies reveals an extreme form of minimalist space: there’s hardly anything in them. The hope of developers is this blankness will appeal to a wide range of tenants. “You don’t want to build something a future tenant will want to take out,” said Louis Cornejo, the commercial broker for 1515 15th Street, a 40-unit mixed-use development on the corner of South Van Ness.
Conversely, Cornejo says he’s seen a number of new developments that, in leaving a little to the imagination, leave too much out of their designs.
“You’ll often see residential developments with poorly designed space for retail,” Cornejo said. “For example, there’s times developers have spaces that could be a cafe or limited restaurant, but they haven’t even built the right space for taking out the garbage.”
And then there are the empty spaces with particular owners who want control over their tenant’s design moves. When negotiating with one broker, Haman was told that for a business to move in they would have to pay for a specific architect to design the interior of their store. The developer wanted the ground floor to fit a certain style and as a stipulation of their lease the business had to pay up front to get the space’s chic factor up to code. The deal didn’t go through.
Even big retailers can be turned off by the aesthetics of untouched new spaces. David Scanlon, the commercial broker at the new mixed-use development at 19th and Valencia says that certain lifestyle brands are coming to the Mission specifically for the neighborhood’s eclectic, funky character and may not want glass-walled modernity.
“A lot of concepts would prefer to go into old building, not some new development like ours,” Scanlon said.
If the rent is high, the space is bare and the hip-factor is stringent, the pool of commercial tenants that mixed-used developers will make deals with gets increasingly shallow.
New millenium, new street
The Mission’s trend of longtime businesses closing and sustained commercial vacancies connects to larger economic forces and generational shifts. The internet abounds with think pieces about how millennials spend money. Most reference post-Recession frugality and delayed milestones, but one factor that seems particularly salient for the Mission’s new generation (many with Silicon Valley careers) is the internet.
The internet has decidedly altered how people, especially young people, shop and consume—which means it’s also changing the built environment of neighborhood streets.
“Small neighborhood businesses have always competed against downtown, and have always competed against big box stores, and now, on top of that, you have these small brick and mortars against the World Wide Web,” said Phil Lesser, a longtime neighborhood pro-development force.
Businesses like The Balm and Project Juice that have successfully moved into one of the Mission’s newest built retail spaces on 19th and Valencia also have robust online commerce. Businesses that are struggling to keep their door opens don’t, or can’t, exist online.
One of Lost Weekend Video’s chief appeals is wandering the aisles of cult and classic movies and chatting with the staff. Its charm comes from hanging out in physical space, not the swiftness of its commercial transactions. The tactile delights of gathering vintage clothes by the pound at Clothes Contact is one that requires an embodied, physically present shopper. Its motley array of wares can’t be easily catalogued for e-commerce.
In these longtime institutions, physicality is a must. But increasingly for new businesses coming to the Mission, digital sales come first.
Lesser worked with the men’s clothing brand Jack Spade in their abandoned attempt to move onto 16th Street, and he says they came to the Mission specifically because of its online shoppers.
“Jack Spade saw that with the exception of Manhattan, zip codes in and around 94110 were their biggest web sales in the world,” Lesser said.
It’s an increasingly common cliché that we live in an era in which you can get practically anything you want with a click of a mouse (or, more likely, the tap of a touchscreen). Jeans or juice, meals or movies, fresh groceries or first dates, click and it’s there. But these so-called seamless transactions are permanently shaping the public space in which we live. You can see it in every one of the Mission’s “For Lease” signs.
Correction: A previous version of this article misspelled Sabrina Haman’s name. It has been corrected.