Despite an appetite for discounted deals, some of these vacancies are proving hard to fill
by ANNIKA HOM AUGUST 26, 2021 (missionlocal.org)
If a “For Lease” sign could say “pick me,” this one appeared to be doing just that. The spotless square sign shone in the sun, contrasting with the surrounding paint splatters and scrawled graffiti on the grey building’s exterior. A man dawdling in front of the vacancy at 2183-5 Mission St., near 17th Street, was unaware of what the former business was, or what it might be. “A restaurant?” He guessed in Spanish. All he knew was that it had been empty for a long, long time.
There have been more commercial vacancies on Mission Street now than at any other time in recent memory, according to numerous local real estate agents. Based on a Mission Local analysis, almost nine percent of Mission Street retail spots are vacant, and that’s conservative count; it doesn’t include shuttered businesses that we couldn’t independently confirm were “for lease.”
Like Valencia Street, brokers and landlords note higher interest on the commercial market than last year, and are willing to concede deep price reductions and structured leases to close deals fast. But that may not work as effectively on Mission Street, which, despite the added consequences of Covid-19, has struggled with strings of vacancies for years.
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“When you have such a long commercial corridor with never-ending retail, it’s hard to keep it occupied,” Jaron Eliopoulos, a Touchstone Commercial Partners agent said. In terms of vacancies, “I don’t think Mission Street has changed incredibly.”
Go big or go home
Several of Mission Street’s current problems trace back to the days after the 1906 earthquake, when it rose to become the city’s commercial corridor while downtown and Market Street recovered. The retail spaces for shopping and going to the movies were grand and large; many are at least 3,000 square feet, and some are even 20,000 square feet and 150 feet deep.
Few modern-day businesses can use that much space, or pony up the cash to lease it.
“It’s so deep, and there’s so much square footage, that ends up costing a lot to have these businesses,” said Mark Kaplan, the managing broker for Rockwell Properties. “There’s just not as many uses that can go into Mission.” (Full disclosure: Mission Local rents from Rockwell Properties.)
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It’s not particular to Mission Street. The Marina District’s present vacancy woes derive from less attractive, large spaces, too, agents said. Few businesses, for example, can take over the massive former Payless Shoes, at 2656 Mission St. near 22nd Street, that Kaplan was leasing in 2020. Though a dentist office eventually moved into the space later that year, that’s an exception.
Office spaces are generally verboten, as the planning code dictates only “active spaces” can occupy ground floor units sans an extensive review process.
And spaces that need development are even more difficult. The bare-bones structure of a building at 2551 Mission St. near 22nd Street has remained undeveloped since 1987.
The original theater was reincarnated as other cinemas over the years (most recently Cine Latino), and the latest attempt to revitalize it was a proposed health center. But the planning application was withdrawn in September, 2020. At present, a sign from Louis Cornejo, the co-founder of Urban Group Real Estate, again advertises its lease.
“We’ve been getting calls to the property; it’s just about matching the right user to the space,” Cornejo said. Then, there’s the size; most offers want only one floor. “How do you occupy the other floors?” he said.
Aging and decrepit structures, such as the building with the spotless sign, may deter prospective tenants who figure the cost of renovations for a large space is too high. “It still needs quite a bit of work,” said Cristal Wright, a broker at The Agency tasked with getting 2183-5 Mission St. off the market following its years of vacancy. It was a Chinese buffet, then an entertainment venue, and a tapas place, she said.
Compare Mission Street’s vast, deep spaces to those on Valencia Street, where spaces are generally closer to several hundred and 1,500 square feet, and can be about 15 feet deep. “Small space always leases up fairly quickly. If you had a 20,000 square feet and redo walls, floors and lighting … imagine the difference,” Cornejo said. “On Mission Street, a small space is 5,000 square feet.”
When tinier and shallower storefronts on happening corridors like 24th Street and Valencia Street exist, he said, most “people say, you know, ‘why don’t I do something on Valencia?’”
Competition
Agents agreed that entrepreneurs often pass up Mission Street for Valencia or 24th streets. And it’s not only due to size.
Similar to Hayes Valley, shorter commercial corridors can usher more foot traffic and more success. Though Mission Street offers hundreds of businesses, that can be overwhelming sometimes. “There’s no other street with this much commercial with no interruption,” Kaplan said. Valencia and 24th can be easier to fill up, and to create a small-town feel shoppers like.
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Mission Street, Cornejo said, also lacks an “anchor” attraction that brings a lot of people who then stay around to go to another bar or store.
Numerous public commenters and restaurateurs, too, pointed out Mission Street’s bus routes and stops meant fewer restaurants there could take advantage of the city’s Shared Spaces program, which has lured more customers thanks to increased visibility.
Getting down to business
And, there is the perennial problem of permitting a business.
Albert Tam, who is leasing a property at 2040 Mission St., near the 16th Street BART Plaza, said he’s been trying to launch the next-door unit at 2044 Mission St. as an Asian fusion restaurant for months now. Tam alleged that PG&E hasn’t responded to multiple requests for electricity authorization. “Our store is sitting vacant. Without that authorization from PGE, we can’t do anything,” Tam said. “We’re thinking of scrapping the whole idea.”
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Sometimes, passionate Mission community members and competing entrepreneurs stall projects when they feel a business doesn’t fit. The Creamery, a former downtown coffee shop touted for hosting tech deals, has secured 1801 Mission St. near 14th, despite the commercial for-lease sign in the window. In June, the Board of Supervisors struck down an environmental appeal that would have blocked the project.
These hurdles compound tenant anxiety, especially when readying a big fixer-upper like the 2183-5 units back near 17th Street, even with its spic-and-span sign. A brewery was supposed to occupy it, Wright said. “We basically had it pretty much rented, but with all the red tape of the city, it was going to be almost a two-year project just to get the doors open,” she said. “You jump through hoops with the city. Businesses are still a little hesitant.”
ANNIKA HOM
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… More by Annika Hom
