Rendering of the building approved for 793 South Van Ness Avenue, by Ian Birchall and Associates

A large advertisement in the window of the year-old 793 South Van Ness Ave. building invites possibility: You could open a restaurant here. It’s already partially built out with a hood. Above it are 75 homes, mostly full of tenants who might become regulars. 

“It’s a perfect spot,” real estate agent Ross Schomaker said. 

But right now, there are no takers.

Mixed-use development with large ground-floor space has enticed developers more in the past few decades. Not only has the San Francisco Planning Code required it in certain areas, but the type allows owners to diversify their real-estate holdings with commercial and residential, and it also caters to a demand for housing a minute’s walk from a storefront or cafe. 

Since 2018, at least half a dozen mixed-use, market-rate projects have opened in the Mission, totaling more than 200 homes and multiple ground-floor commercial spaces. 

But several of those large commercial spaces remain empty, for a mix of reasons: The pandemic was a poor time for opening a business, landlords may be holding out for a better deal, and tenants can afford to shop around, and might be nitpicky about interior layouts.

That has put a dent in dreams of European-style apartments with sidewalk cafes and constant foot traffic. Just like other retail, Covid-19 has meant that new mixed-use, market-rate projects in the Mission simply do not match the design concepts pitched by developers and architects right now. 

Instead, many have cavernous and empty ground-floor spaces.

Jaron Eliopoulos, a realtor with Touchstone Commercial Partners, said he and his partner tend to oversee 40 available listings between themselves pre-pandemic. Now, that load has ballooned to 100. 

“And every top broker is experiencing the same thing,” he said.

Ground-floor ‘shells’ hard to sell

Realtors blame the inability of owners and potential tenants to see eye-to-eye on the space, and newly constructed mixed-use buildings may be particularly vulnerable. 

Vacant retail spaces in new buildings are more likely to be a “shell,” or a bare-bones space with random adornments. When a tenant with a specific business in mind shops around, they are less likely to rent a spot that needs significant renovation and money to create their vision. “There’s a lot of tenants who want to open as soon as possible,” Eliopoulos said. 

Right now, “because there’s so much supply, even if it’s a second-generation vacancy with minor cosmetics,” tenants will pick that over a newly constructed building. 

On the other hand, he’s seen more developers “go the extra mile” when building new mixed-use projects, and “design it to set up a retail space. I feel architects have gotten better at that.” 

Case in point: Two commercial condos in a mixed-use building on Valencia Street, which Urban Group Real Estate successfully sold to Kuma Sushi and D&H Jewelers in 2022. 

Louis Cornejo, president of Urban Group Real Estate, said he could sell two commercial condos in a mixed-use building on Valencia Street because “this specific developer [was] very thoughtful in the final product, which has an appeal to many retailers.” 

Location, location, location

As with all real estate, location is everything. 

Retail spots on off-shoot commercial streets tend to be less desirable without an “anchor” business that draws customers and foot traffic. This may contribute to the vacancies of one mixed-use condominium on Harrison Street, and the other on 793 South Van Ness Ave. 

“Mixed-use makes sense, especially, on a primary retail street like Valencia. On some secondary or tertiary streets, maybe not,” Cornejo said. 

Nevertheless, Planning Code rules require buildings to include active ground floors in several zoning districts.

Forcing a developer to include ground-floor retail in new buildings, however, may not work for every area, Cornejo said. “Sometimes, the city requires retail storefronts on streets like South Van Ness or Gough Street or alleyways. These can be very difficult to lease. It’s where you see most of the vacancies.”

Additionally, the surrounding area may contribute to a tenant passing or leaving a space. Restaurant Hawker Fare on Valencia Street and bakery Third Culture left for better locations, citing, in part, the Mission’s poor street conditions.  

Real estate and residential agents also reiterated trouble leasing in areas where more homelessness or crime occurs. Schomaker said he felt like a “first responder” for the number of times he dealt with people vandalizing doorbell systems or breaking into vacant units. 

Waiting for the right tenant 

In some cases, property owners are turning away potential businesses because they want the perfect commercial tenant. An agent for a long-term vacancy in the Mission confirmed that the owner received multiple offers, but those didn’t fit. Stubborn vacancies along the north end of Valencia, in the 200 and 300 blocks, appear to fall under that category, too, according to Mission business owners around the area.

An owner might turn down certain businesses in favor of a certain aesthetic, especially if it’s a larger project. 

“Carefully selecting a business tenant can be important, because those are immediate amenities to help sell the value of the residential,” Eliopoulos said. “I’m not speaking for everyone, but I think the majority of residents would prefer to have a nice coffee shop versus a smoke shop or a liquor store below them.”

Still, sometimes neighbors wouldn’t want that; community opposition could also potentially kill a deal.  The owner of 1801 Mission St., a 17-unit mixed use building that opened in 2020, hoped to offer a lease renewal to the Creamery, a coffee shop that once thrived in SoMa, thanks to its popularity with tech clientele. Yet some Mission residents opposed the cafe and accused it of increasing gentrification. The Board of Supervisors disagreed, but no business has taken over the spot since.

While the city attempts to entice new businesses with $4 million in grants dedicated to filling storefronts, many agents feel that vacancies will only go back down when the economy picks up again. 

“It feels like Covid has taken its toll. We’ll see in time,” Eliopoulos said.

Schomaker, the real estate agency, added of the empty 793 South Van Ness: “Why wouldn’t a [business owner] want a space with people above him, who could go down and shop and eat at his business?”

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REPORTER. Annika Hom is our inequality reporter through our partnership with Report for America. Annika was born and raised in the Bay Area. She previously interned at SF Weekly and the Boston Globe where she focused on local news and immigration. She is a proud Chinese and Filipina American. She has a twin brother that (contrary to soap opera tropes) is not evil.

Follow her on Twitter at @AnnikaHom.

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  1. This is a real scourge on not only the Mission, but the City in general. The article leaves out the obvious reason for all these vacancies – unrealistic landlord expectations. I was in Portland recently, and there is a LOT of mixed-use construction. The commercial floors are largely filled, with varied local retail and food. There’s a simple reason – rents are cheaper. So long as SF landlords refuse to accept reality – rents aren’t what they were – things stay vacant. The Saitowitz building at Market and Octavia has had an empty space since it was built – 8 years ago. The former Flax space has never had a tenant in, what, 5 years? Landlords need a push, instead of letting them wait for unicorn tenants.

    My only policy prescription is deny occupancy permits for the residential units until a commercial tenant is secured. Owners would *scramble* to rent out the spaces, at whatever rate they could get. Sure, there are logistical problems with it, but it would keep the city from having vacancies everywhere.

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    1. Just wanted to add a couple things. First, “location” is an odd thing to single out. It is meaningless absent – again – the real ingredient of *price*. Yes, there are more and less desirable locations. You price less desirable ones lower to attract a tenant. So the problem isn’t South Van Ness and 19th. It’s South Van Ness and 19th being priced at $X instead of $X x 1/2. Landlords in the Mission seem to think everything is Valencia Street.

      Second, I wonder if there’s someone you could talk to when writing a story like this, other than real estate agents. They all have a profound interest in keeping rates high. You’ll never find a real estate agent who will say, “we really need to knock commercial rents down 50% citywide.” I’m not sure who you *should* talk to, but that’s a real bunch of interested parties you’re interviewing.

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  2. If a resident opposes a coffee shop on the grounds that it represents “gentrification” then why do they live in one of the prime areas and cities for gentrification? And what would they prefer to see there?

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    1. I don’t think the objection was to a coffee shop per se, but to the Creamery in particular, which catered to a tech crowd. These are long term residents who have seen their neighborhood become less and less hospitable/welcoming to them. It’s a tricky balance- a business has to accommodate a certain amount of the existing customer base or they’ll likely fail. For example: the ultra sleek laundromat/cafe/winebar that opened at Mission/2Oth, which looked more like an apple store than anything else. It lasted maybe 3 years?

      My main “objection” to the ground floor retail being built in mixed-use projects is that they are completely unappealing spaces, an architectural afterthought. Street levels are usually not great in new buildings from the perspective of a pedestrian, and the retail spaces are anonymous and cavelike.

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      1. Your observations about the realities of including retail space in ground floor mixed use buildings aren’t wrong. The irony here is that the Planning Department often makes them a requirement in the hopes that they will have the opposite effect. Planning is also quite fond of requiring ground floor residential units to have their own individual front entries, with stoops or semi private patios. The idea is that if only we had a lot more ground floor retail and apartments with front stoops then San Francisco would become a Jane Jacobs style urbanist utopia. Unfortunately the reality of street conditions in San Francisco make these kinds of spaces difficult to manage, especially depending on what part of town you’re in. And unless you are lucky enough to be dealing with a developer and architect team that’s uniquely thoughtful, most of these spaces tend to be approached as afterthoughts or boxes that need to be checked in order to get their project approved as quickly as possible.

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      2. Agreed.
        “completely unappealing spaces, an architectural afterthought”
        These spaces were put in strictly to conform to the diktat of the Planning Code “rules”.
        Would speculate developers understood the spaces would stand little chance of occupancy so put minimum development into them.
        Such a glut of these vacancies ruining the street vibe yet they keep building more.

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  3. These mixed use commercial units are high-rent blight. We should tax the s** out of commercial units that are kept vacant.

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  4. This could be a perfect opportunity for the city to build some Turkish baths and public restrooms and laundry facilities. That would go a long way toward cleaning up the streets that everyone complains about.

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  5. For at least a decade, there has been a glut of vacant storefronts in the Mission. It’s crazy to continue to require new buildings to have retail at ground level. Put housing on the ground floor instead. For example, there are 2 renovated, vacant storefronts at 3258-60 23rd St. They were art galleries, & are now graffitied, the doorways are full of trash, & soon someone will start a fire or break the windows. With a bot of flexibility from the Building Dep’t, they would work as dwelling units, or work/live units. Ground floor units would be easier for people who have trouble with stairs, or use wheelchairs.

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