A lukewarm welcome awaited the proprietors of a potential new real estate office and coffee shop at the Planning Commission, where Keller Williams Realty on Thursday sought a permit to move into what was once ArtZone 461 on Valencia Street.

The realty firm has dozens of locations across the country and several in the Bay Area, and at issue is whether it should be able to move into a space reserved by city zoning for retail.

To comply with zoning and other city restrictions on what may occupy storefront space on the corridor, the realty firm proposed turning the storefront portion of the space into a cafe and real estate themed bookstore area accessible to the public. The office, it said, could be tucked away behind the cafe and bookstore.

“We’ll embrace whatever so we can add that retail component,” said Andre Davis, a consultant who spoke for Keller Williams.

Despite the compromise, the firm will still be required to get a conditional use permit from the city – and local merchants took that opportunity to express concern that the coffee shop would merely be a facade.

“This is a sham, this is not a real retail space,” said Jefferson McCarley, general manager of Mission Bicycle and vice president of the Valencia Corridor Merchants Association.

Jason McArthur, who runs the store Five and Diamond, characterized the coffee shop as an extension of the realty office.

“This is troubling to me because shifting around office space to shift the conference room and water cooler space in the front does not to me mean an active retail space,” he said.

Representatives from Ritual Coffee worried that the vendor at the new cafe might be a chain store like Starbucks or Peets.

These concerns fell on fertile ground at the commission.

“I think the space is well-designed, but I’m a little concerned we’re following the letter of the law and not necessarily the spirit of the law,” said Commissioner Rich Hillis. “We do want to promote retail.”

Commissioner Christine Johnson, meanwhile, pointed out the permanence of the permit.

“We’re doing a change of use and that stays on the land,” she said. “I’m a little bit concerned about that.”

Others were concerned specifically about adding another coffee shop to the street.

“It’s really becoming a restaurant destination,” said Commissioner Dennis Richards. “I’m not sure adding another coffee or food provider there is a great idea.”

“I am concerned about the competition and oversaturation of coffee shops in the corridor,” said Commissioner Kathrin Moore, who wasn’t sold on the combination of office and coffee either. “Whether a real estate office is really the place where I would want to have my coffee… I question that.”

Commissioners traded ideas for alternatives, like expanding the retail portion of the space, requiring that the entrance to the realty offices be in the rear, on Caledonia Street, or even asking that the firm trade out the coffee shop idea for a new art gallery, but seemed to agree that the retail and office spaces should be clearly separated.

Davis pushed back against concerns about the cafe, emphasizing that Keller Williams had held two outreach events about the proposal and touting his own experience as a lifelong San Franciscan and as the designer of Toast cafe in  West Portal.

Ultimately, the commission decided unanimously to revisit the decision on June 16, and asked that Keller Williams work with local merchants to reformulate their plan – leaving merchants and realtors to argue further in the hallway.

The space has been a point of contention before. After ArtZone 461 moved out, luxury automaker Pagani eyed the space as a non-car accessory design showroom. City requirements for high-cost repairs ultimately prompted the automaker to look elsewhere, and the former gallery, along with two other adjacent retail spaces, has been vacant since.