Business was thriving when Marian’s Apparel first opened shop on 2046 Mission Street. But after 63 years of clothing and serving the community with its in-store credit system, the store was shut down in 2016.
“The economy, the internet, and all the competition” led to the store’s demise, according to Joel Anker, who managed the store along with his brother-in-law.
Two years, later the space remains vacant — an increasing condition along Mission Street: Mission Local counted 49 vacant properties along Mission from Duboce Ave. to Cesar Chavez.
But, as is true with so many storefronts that look empty, not all stand vacant waiting for a tenant. In fact, of the 49 vacancies, only 19 are for sale or lease; eight are not on the market, eight are undergoing renovations, and 11 recently submitted permit applications or were recently approved to make renovations. The status of three vacant storefronts could not be confirmed.
Mayor London Breed and Supervisor Vallie Brown last week announced the Storefront Vacancy Strategy, an initiative aimed at lowering the number of vacant storefronts across the city by streamlining the city’s response to the business permitting process.
The initiative will attempt to alleviate the struggles many realtors face when leasing storefronts along Mission Street, and it theoretically would allow for more creative use of space, but specific restrictions remain.
Large companies and businesses that sell alcohol, for example, will continue to face tightened restrictions in an effort by the city to fight gentrification and displacement in the area.
A microcosm of the vacancy problem
The addresses 2949, 2959, and 2967 Mission Street stand by side by side. Located between 25th and 26th Streets, the storefronts were most recently were known as The Fizzary, Mission Critter and Merlos Financial. Now they’re all vacant.
The Fizzary, a retail shop with hundreds of soda options, closed in 2015 after three years in business. The storefront was subleased later that year to someone operating an illegal gambling den. Records from March show property owner Roberto Sanchez applied to change the building’s use from retail to restaurant. The storefront remains vacant.
Mission Critter, a local pet shop, stood at 2959 Mission St. for five years. Then business slowed and Tim Costigan, the owner, closed shop in June, another victim of online shopping, according to Costigan. The 1,450 square foot space is ready to be leased for $2.75 month per square foot, according to Ed Maiello, president of Citivision Commercial Real Estate. He is working with HCM Commercial to lease out this space.
“It’s hard to rent the space out,” said Maiello. “It’s not on the best block of Mission Street.”
This kind of reporting takes real reporters – not bots. Support an independent press today.
Merlos Financial once stood at 2967 Mission St, but Mission Local couldn’t confirm how long the storefront has been empty. It was sold in March of this year for $2 million, according to property records. It appears to currently be off the market, and no recent permit applications have been filed for this address. Neighbors could not confirm the status of the building.
MAP KEY: For sale = yellow; For lease = red; For sublease = orange; Off-market = green; Renovating = brown; Permit in review or recently approved = black; Unconfirmed = purple.
What used to be a coffee house and bakery business at 3017 Mission between Cesar Chavez and 26th Streets has now been vacant for about two years. The building owner, Philip Fernandez, said he does not know why the business shut down.
After the bakery closed, new tenants planned to convert the space for restaurant use. But Fernandez said a contractor misled the tenants and they never managed to get the approvals needed to move forward with construction. It has remained without tenants for nearly a year now.
Fernandez said he is in no rush to put it back on the market.
The Board of Supervisors passed an ordinance years ago requiring properties left vacant for over a month to be registered with the Department of Building Inspection. Building owners would then be charged an annual fee as long as the space remained vacant. But the ordinance has largely gone unenforced.
Planning Commissioner Dennis Richards said enforcement is an issue with any initiative.
“When the Board passes something, they need to fund enforcing,” he said. “Without the enforcement funding, you have these rules that become kind of meaningless.”
This lack of enforcement might change with new legislation introduced by Supervisor Sandra Lee Fewer last week. If approved, owners of vacant storefronts would face tightened requirements, like paying four times the registration fee if they fail to register within the required time frame.
Fernandez said 3017 Mission Street, part of a four-story building filled with corporate and local businesses, will probably end up being a coffee house or bakery when he puts it up for lease at about $2 per square foot.
He blames the vacancy problem on Mission Street on tenants having to keep up with so many “regulations, rents, city approvals, and city fees.”
That complaint became a repeated chorus as Mission Local worked to figure out why vacant properties line Mission Street.
“The Mission is a very challenging place to bring new business,” said Santino DeRose, a managing broker at DeRose & Applebaum, a commercial real estate company.
He lists zoning limitations as the biggest challenge because “finding contractors to go through all this is very difficult.”
By “all this” he means the heavy permitting process that most realtors we spoke with want to be streamlined. It’s too early to tell if Breed’s new initiative will solve this. But restrictions are there.
At present, many of the ground floor vacancies are limited to local retail businesses, even though, according to the realtors we spoke with, larger companies tend to have the time and money required to get through the city’s permitting process.
“It’s the new entrepreneur that doesn’t have the money and time,” said Richards, referring to the long and expensive permitting process in the Mission and across the city. Those are the kinds of businesses the Mission community wants, according to Richards.
But even small businesses need to apply for permits to get their sites up to code. Permits depend on the type of business they want to open.
“I get what London Breed is trying to do, which is rethink our zoning,” said Louis Cornejo, president and founder of Urban Real Estate Group.
As it stands now, “the city is requiring more retail — more supply than there is demand,” said Cornejo. “I’d love for businesses to be spending more on the Mission, but only certain businesses can be here.”
Cornejo added that the large, narrow spaces available on Mission Street are difficult to fill — permit issues or not.
“The only available product on Mission is too large for most uses, and then it only allows very few uses for that space,” he said.
Take 2813 Mission as an example. It used to be a Western Dental, and then they moved down the street because they needed to renovate the space. “They found a better deal, and they didn’t want to renovate on their own,” said Alexander Kolovyansky, director of investment sales at Vanguard Properties.
The building Kolovyansky is leasing has nearly 3,000 square feet of space on each of its two floors, according to Loopnet.com, an online site for commercial real estate postings.
The large spaces are “not for everyone,” according to Kolovyansky. “The people who can take those spaces are the people who also face formula retail.”
Passed in 2007, formula retail restricts businesses with more than 11 stores anywhere in the world. If they want to start the 12th location in San Francisco, they must go through an additional public review process.
Although these chain businesses have previously been approved on Mission Street, many simply don’t think it’s worth going through the process.
“They just won’t go into the Mission because they’re scared of being rejected,” said DeRose. “And the neighborhood doesn’t really want them there, so there’s that.”
Many realtors we spoke with agreed that people would rather do business elsewhere.
“I really think San Francisco is in for a backlash of people leaving the city,” said Raoul Isaac, a real estate broker.
It’s a sentiment several other realtors echoed.
To alleviate these tensions, the Board of Supervisors recently approved a new Flexible Retail Use ordinance, spearheaded by Supervisor Katy Tang.
The ordinance would allow different types of businesses to run out of the same space, including pop-ups — and it might help solve the large-space issue may realtors run into.
This ordinance does not apply to the Mission District, but “each supervisor might want to consider this for their districts and make it city-wide,” said Richards.
As with other initiatives in the city, legislation enforcement will be needed for this new use of space.
That, once again, is also the case for another piece of legislation passed last week aimed at filling empty storefronts.
Initially introduced by Supervisor Norman Yee and passed unanimously by the Board of Supervisors, this new legislation will “help create affordable child care units for family child care operators in the ground floor space of new and existing mixed-use developments.”
The ordinance is meant to be a compromise between building owners with vacant storefronts and home-based family child care providers who need a space for their business after facing housing displacement.
Once again, permits will be needed to get buildings up to code. Child care facilities, per state law, must abide by additional, specific regulations to make buildings safe for children.
“The regulations are important for the safety of the children, but it takes a lot for places to qualify,” said Kolovyansky, who has previously worked to find spaces for preschool businesses.
“There’s a lot of good ideas but difficult implementation,” he said, because “unless it’s heavily subsidized, they still have to pay for a lot to keep the doors open.”
Richards agreed: “They can’t open unless they have the right things in place. You’re dealing with children, so it’s a life-safety issue.”
He likes the idea, though. “I hope that it’s successful. It certainly is a public use.”
Public use is something Richards thinks about often when reviewing new businesses. It’s one of the reasons he said office use is not being considered for ground floor storefronts.
“Office spaces aren’t active uses,” he said. “They aren’t open to the public.”
If a business wants to put office space on the ground floor they might be considered only if they make the space available to the public in some way.
He offered Umpqua Bank as an example. The bank, an Oregon-based corporation, has office space on their ground floor, but they also host night-time community events, making the building an active public use space.
Even if the demand for office use were high, Proposition M, passed in 1986, caps the amount of office space that can be approved every year.
And on Mission Street., the city’s planning code specifically restricts ground floor storefronts to active commercial use. No offices are allowed, unless they submit a permit application and undergo an extensive review process.
“You can’t just go out and rezone the city,” said Richards, when asked if the city would consider changing zoning restrictions to meet demand for office or residential use. “There’s a long process.”
The Storefront Vacancy Strategy sponsored by Mayor Breed and Supervisor Brown does not amend zoning restrictions, but it will attempt to revise parts of the city’s planning codes.
The strategy will be enforced with new legislation, new programs, and administrative reforms, according to the mayor’s office.
To enforce the new strategy, Mayor Breed and Supervisor Breed introduced an ordinance the day after the strategy was announced that would make amendments to the city’s planning code.
Businesses seeking to apply for a Place of Entertainment Permit, for example, would need to file an application with the Entertainment Commission who would forward the application to other departments who need to approve the permit. As it stands now, business owners need to independently seek approval from each department, lengthening the permit process.
Several realtors we spoke with also mentioned special interest groups in the Mission make it difficult for new businesses to enter the Mission.
Aside from zoning restrictions, “all the other impediments tend to be rooted in local special interest groups that try to make it more difficult,” said a realtor who declined to be named, citing company policy.
“You’ve got local groups that are harassing local tenants, telling them what they can and can’t do. It’s unfortunate,” said Kolovyansky.
Neither would name the groups they had in mind or provide further details. Others see such pressure as necessary to prevent the Mission from being overrun with businesses that do not serve the community.
For those already here, many fear their own businesses might be the next vacant storefront. They blame increasing rents, parking restrictions along Mission Street that many seem to hate, and a changing economy.
At Latin Bridal, business owner Silvia Ferrusquia, said she used to rent a space a few blocks away at 2631 Mission. She has owned the wedding and quinceañera dress store for 28 years.
Now at 2644 Mission, she said she’s on a month-to-month lease because the building owner refuses to let her sign a longer-term deal. The space next door is empty, and the owner wants to keep his selling options open.
With so many vacant spaces, she worries about the future of the Mission.
“En donde esta la identidad de la Misión?” she asked. “El barrio latino? El barrio chino?”
She doesn’t know how much longer she can stay open for business.
Excellent article. The City is strangling the economy on many levels, but beyond a doubt, the once fiercely affected are small businesses. The long list of permits, the DEPARTMENT OF PARKING AND TRAFFIC. Parking tickets are outrageously high and that department is sure efficient about giving tickets away. Working people and business owners, can’t focus on their work because they have to be worried about a parking ticket that costs more than what they make all day!!!! The Mayor should hire me to tell her EVERYTHING that is hurting small businesses, and how that is hitting every aspect of the community.
That’s correct! The Mayor needs to know what a difficult is to survive like a business inside of a City with a lot of deficiencies snd mediocrity and it looks that every day the city is going worst and worst! Now is so terrible at 24th and Mission! Calle 24th is helping people to get permits to sell food on the streets. And their argument is “They pay taxes”. Health Department are so terrific with restaurants and let people to sell food on the street with no water, no restroom, no rent, no insurance, no electricity, no payments of nothing. They make more money that the stablished restaurants. But the city is Close! They are acting like Madre Teresa de Calcuta by one side and are acting like… at the other side.
What a fantastic, detailed an well researched article. Has anything changes at mission local, because the quality of the articles seems to have seriously improved in the last few months.
> Once again, permits will be needed to get buildings up to code. Child care facilities, per state law, must abide by additional, specific regulations to make buildings safe for children.
It is worth mentioning many of these codes are at the state level and very hard to meet in SF> For example “There shall be at least 75 square feet per child of outdoor activity space based on the total licensed capacity.”
Which is a lot of space, Most commercial properties do not have that outdoor space, so then you are required to covert homes which is exceedingly expensive (more so then converting commercial space). But then most neighborhoods either aren’t zones for child care, or vehemently oppose it due to the congestion during drop off an pick up.
Little Bear child care has spent years trying to convert a home into a child care center to move into and Mission Kids has spent nearly a decade looking for a space in the mission (having just found one across for Ninos Unidos park).
Yo, 2967 is becoming an improv theater and training space.
Well it took Hamburger Mary’s almost 20 years to get license to operate. Let’s hope San Francisco has learned a thing or two.
The article addresses possible reasons landlords can’t find retail tenants at the price the landlords want to get. All the realtor bogeymen are there: permits, regulations, onerous gummint burdens, neighborhood interest groups, zoning laws, yada yada.
The conventional business strategy to deal with slow-moving product is to LOWER THE DAMN PRICE. The article doesn’t address whether the prices the landlords are asking are unreasonable, and if so, why aren’t they dropping?
The only price mentioned in the article is $2 per square foot. That doesn’t seem crazy high, I think? Certainly it would be cheap for an apartment. If you could get a 500 square foot apartment for $1000, that would be a steal. Or is that not representative of what landlords are asking?
Smart business people don’t want invest in declining markets….. San Francisco seems to be the capital of economic ignorance?
It isn’t so much a case of economic ignorance as it is of a sense of economic entitlement on the part of landlords.
“Smart business people don’t want invest in declining markets”
According to the theory of supply & demand, a crash in demand should result in a crash in prices. Yet, prices (for the spaces that haven’t been taken off the market) are still at or near the business cycle high.
Are landlords not subject to business cycles? Are landlords entitled to business cycle peak prices for eternity? What other business operates like this?
Give it time , it’s early in the cycle, I expect it to get worse and nasty with the “progressives” looking to punish some group for exposing the flaws in their social fantasies. Maybe soon the streets of SF will be a wasteland like Detroit. Even if rent pieces do go down the whole downward trend is bad for any business. No one invests in a place with falling rents. Decline is toxic. You just don’t understand how economies work. Forcing business people to do things negative to their business or making the business environment hostile will make them leave, just like migrants leave Central America because their lives are made crap by the conditions they face. Businesses go to where conditions are best for them…. and that is not “progressive” San Francisco.
Refugees migrate from Central America largely because the United States overthrows democratically-elected governments (thanks, Hillary!) and installs right-wing death-squad regimes that are more pliant to US business, and that are more willing to take on IMF loans to buy US weaponry to arm the death squads that force workers to flee to the US where their children are separated from them or simply left to die.
Mission St is deteriorating not because of any grand “progressive” conspiracy to provide a hostile business environment to long-suffering and heroic white businessmen, but because landlords are incentivized to leave their properties vacant.
Hmmm…. so these stores closed before the red carpet transit lanes were introduced? Interesting….
Gotta love the SF government .
Step 1. Create a byzantine structure and make business compliance costly for business
Step 2. Micro manage housing design and construction that increases housing prices and makes it impossible for low wate occupations to stay in the city
Step 3. Complain about vacancy.
This problem is created by the SF govt. Taxing owners is daylight robbery
If you would like to open a business, San Francisco is probably one of the worst places in the nation to try it. The bureaucracy is simply cancerous and will eat you alive. For example, all public serving business are required to have their access doors ADA compliant by this Jan. 1st. Fine. But rather than sending out a checklist of standards,the business owner can check off and see if they have any issues to fix. The city mandates you must hire an expensive architect to assess your compliance. YOU CAN”T DO IT YOURSELF ! Never mind you door will be full of vagrant debris every morning or worse yet, be caked with human shit. It’s more important to run up a huge bill bill to make your overlords in government feel the full breath of their massive power. Only fools try and open public serving businesses in San Francisco, and a fool and their money are soon parted.
Thanks Sam, I’lll give your memo about San Francisco being a bad place to startup a business to all the Sequoia Capital, Andreessen Horowitz and the other Big VC firms to let them know that they are stupid as all for backing so many new businesses around here.
Are any these businesses you mention on Mission Street? Interacting with the local people? They are quite happy in their high security downtown office towers and their Pacific Heights mansions. But of course, none of the successful franchise business they may invest in, will be opening in San Francisco. But they don’t care, the rest of the non delusional world still welcomes them.
Go tell that to you buddies Paul Ryan writing tax laws to benefit the Billion Dollar Companies, that perversely let big Dollar Daddy zero out their taxes cause they are “losing money” on empty building, while the real strategy is
waiting for the home run price, and conducting cartel supporting activities.
Make them pay for leaving the building empty for years, instead of letting the space be rented, and the tax flow go elsewhere.
Pretty obvious what’s going on with retail space in SF. Every landlord wants high paying tenants to start upscale tenants, but the local economy can only support so many of those businesses. This high-rent blight will continue.
Real estate is an asset, not a commodity, and it doesn’t behave as commodities are supposed to according to the theory* of supply & demand.
Imagine a strawberry farmer harvesting a crop and waiting three years to get the price he thinks he should get. That’s not how the theory of supply & demand is supposed to work, is it?
Well, this is what is happening with commercial (and soon, residential) real estate in San Francisco.
Markets can’t have price discovery if large amounts of the product in question are kept off the market, or are only available at now unrealistic, former high prices that the seller thinks she deserves.
In effect, different landlords keeping their properties off the market functions as a tacit cartel.
Supply & demand in real estate? Only on the way up! In a falling market, prices are “sticky” because the conditions required for the theory of supply and demand to obtain are suspended, and price discovery can years or decades, instead of weeks or months.
Real estate in this case functions as a rigged market, and the city must impose a vacancy tax if it hopes to restore any semblance of an open and fair market. Otherwise, we will watch as Mission St (and Market St, and soon many others), fall further and further into decay, emptiness, misery, and crime.
*The concept of supply & demand is a scientific theory, not a scientific “law.” Like much else in neo-classical economics, it is an abuse of scientific methodology.
“Comrade Sam”,
Sure thing — more “sticks” and less “carrots” is always a swell way to facilitate real reform.
Let the beatings continue until morale improves, right?
The rents cited are down market cheap rents.
The issue is the city zoning has made it prohibitive to rent larger spaces to the small shops required, and which we all want.
A vacancy tax isn’t going to make those tenants appear our of thin air. Vacancies represent debt not profit. if you don’t know that, stop giving economics lectures.
The strawberry example is stupidity, and it speaks to the utter ignorance of most people weighing. Commercial leases require a 10-20 year contract, and the right to sell that contract to a third party.
Who wants to rent a space for business, in a cesspool of human crap and used needles. Not to mention your expensive glass will be subject to rampant vandalism with acid etched graffiti and glass cutters. Hateful groups will oppose your existence, The truth is todays San Francisco simply hates successful people and rewards and encourages failure. Anyone with more than 12 business world wide is simply banned, you can’t hate success more obviously than that. There are much nicer more pleasant places to do business than the steaming pile San francisco has morphed into. And then there are people like you …..TAX, REGULATE and TAX some more ! No wonder business people are running for the exits !
>Who wants to rent a space for business, in a cesspool of human crap and used needles. Not to mention your expensive glass will be subject to rampant vandalism with acid etched graffiti and glass cutters.
What crazy talk is this. Go look up crime statistics for SF generally and the mission in particular. SF has gotten safer over the decades (the Mission dramatically so). Balmy was coated in needles in the 70s, look at it now.
So, the problem isn’t that retail is way too expensive, it’s that businesses that have thrived on and literally packed Mission St for decades (amidst vandalism, crime, graffiti, city bureaucracy, taxes, regulations, and landlord neglect) are SUDDENLY in 2018 — out of the blue — unwilling to open businesses on Mission St because of rulesregulationszoningsbureaucracygraffititaxes.
The truth of the matter, Mr Walters, is that retail businesses can no longer afford to pay the exorbitant rent you have become accustomed to (and now feel entitled to) through dotcoms 1 & 2. Businesses are shuttering because landlords are asking way too much, not because all of a sudden graffiti has sprouted in the Mission.
The dogs will no longer eat your dogfood, Who’s fault is that? Blame the gummint and graffiti all you want, but if you actually wanted to rent out your spaces, you would just lower the damn rent. It’s a simple, proven, tried and true formula that has worked for hundreds of years.
Could allowing landlords to write off empty spaces (at business cycle peak prices) as business losses have something to do with the epidemic of vacancies?
I called the realtors for 2046 Mission St, near BART between 16th and 17th (across the street from my business). They wanted $18000 (that’s eighteen THOUSAND) dollars a month in rent for the old Marian’s Apparel.
So, I was curious how big the space was. Judging from Google Maps, it looks like the building has a footprint of 80′ x 25′, so the space would be at most 2000 square feet (plus a basement, probably?). So that’s $9 per square foot, compared to the “about $2” mentioned in this article by another landlord. I guess the location gets more foot traffic, but still, wow.
You are so ignorant… you can’t write off money you don’t make. And your hate of people who own property is a study in Marxist pathology.
Thank you great points. !!
The City should be looking for what tax or government laws are preventing the price of renting to fall with all this excess supply of storefronts.
And if the answer is Federal (& State) Income Tax give big breaks to the landlord for leaving the buildings empty, then the City should make laws to return that tax windfall to the city by charging SF prices for messing up the streets by leaving them empty.
Yet all the human shit the streets is not a “mess” ? No one gets a tax break buildings they make no money on. What a stupid “progressive” fantasy, endlessly repeated over and over by ignorant fools. You can’t say this should rent for 5,000 and since it’s vacant I’ll deduct 5,000 from my taxes. The stupidity is breath taking.
I don’t think that’s how taxes work.
I have a spare room. It’s a great spare room. I’m offering it out for rent at $15000 a month– trust me, it’s worth it. One of a kind. Weirdly, no one else seems to agree, so it’s still empty. But that’s ok, because since it’s vacant I get to deduct $15000 a month from my taxes, and so I don’t have to pay any income tax at all! Great.
Yes the 2900 block of mission needs help. It would also benefit from the construction of that proposed apartment building on the site of the “historic” laundromat.
But the BIG BOSS, Hillary Ronan, wants to make a deal the “historic” laundromat owner can’t refuse. More corruption in this city filled to the brim with it. I hope the owner wins big when he sues, the city has to pay separate legal fees if he wins, it will not come out of his verdict. Not that they care, drunk on the 11 billion dollars they party on each year.. Permit “expediters”? How much more sleazy and corrupt can it get ?
That space should not be developed because it will be detrimental to the existing businesses and the residents due to the added congestion. That’s the reason there is resistance to another developer disrupting the fragile ecosystem we have in the neighborhood.
nice reporting. Thanks