from today's
san francisco chronicle:
Retail flourishing again in bustling Union Square
Fresh labels in place in newly energized S.F. shopping mecca
- Pia Sarkar, Chronicle Staff Writer
Tuesday, December 27, 2005
It took four years for Union Square to bounce back.
But today, San Francisco's famous shopping district looks as if it had never had a bad day. With new stores springing up and vacancy rates returning to normal levels, the streets are once again teeming with shoppers ready to throw down some cash.
"Union Square looks fantastic," said Helen Bulwik, a retail consultant in Oakland. "It is one of the top retail areas in the world."
Among the new stores that have opened this year are Zara, Borrelli, Stuart Weitzman Shoes, Lucky Brand Jeans and Cody's Books. But the biggest arrival has been H&M, which opened a store on Powell Street and another on Post Street in November to much fanfare.
"We expected there to be a huge response to the opening, but it was even bigger than we anticipated," H&M spokeswoman Lisa Sandberg said.
Four years ago, shoppers shied away from Union Square as the economy took a nosedive. The Sept. 11 terrorist attacks left people feeling cautious about travel, stripping Union Square of its high-spending tourists. Some retailers were forced to shutter for good. In 2003, FAO Schwarz closed its doors after more than 30 years of business in the area. Eddie Bauer also packed up and left Union Square.
"It's rare to see that much space at one time," said Kazuko Morgan of Cushman & Wakefield.
Morgan noted that a lot of businesses went bankrupt after the terrorist attacks and the dot-com bust, resulting in their disappearance from Union Square. Vacancy rates climbed to as high as 20 percent in 2002, according to Rhonda Diaz, vice president of Terranomics, a retail brokerage in San Francisco.
Today, vacancy rates have dropped to about 5 percent, still a bit higher than the historical average of 2 to 4 percent, Morgan said. Rents have maintained their usual rate of about $250 per square foot, with more than enough retailers willing to pay the price to be in Union Square these days.
With travel picking up again and the economy improving, Union Square is now responding to a lot of pent-up demand. "Retailers started to get serious about doing sales and opening stores," Diaz said.
New leases and store openings accounted for 125,000 square feet of Union Square retail space this year, Diaz said.
In February, Agent Provocateur plans to open a lingerie store on Geary Street, and Juicy Couture will unveil its women's apparel store in the spring. American Apparel has also signed a lease on Grant Avenue.
The most notable change to Union Square has been the parade of new stores that sell fast fashion at an affordable price, as opposed to the luxury stores that have long dominated the shopping district.
Forever 21 started the trend last year, with the opening of its 27,500-square foot store at Powell and Market streets. Zara opened its three-level store on Post Street in September. But H&M topped them all with its two new stores within blocks of each other, a 35,000-square-foot one on Powell Street and a 10,000-square-foot one on Post Street.
Seth Nodelman of Cushman Wakefield said the new stores have not replaced upscale shoppers with bargain hunters but have generated more traffic in Union Square overall.
Customers are drawn to the tight fashion cycles that Zara, Forever 21 and H&M have built their success on, Nodelman said. "It's definitely a new business model," he said. "It gives shoppers another reason to visit because (the clothing) changes so quickly."
As for the small businesses that once graced Union Square, Nodelman said that most have faded from the scene because of the high rents that only the big stores can afford to pay.
"That's been happening for 25 years," he said. "That's sad to see because it gives Union Square local flavor, but they've been priced out of the market. It's very hard for a local merchant to compete in that environment."
Among the exceptions is the independent bookseller from Berkeley, Cody's Books, which opened its two-level store on Stockton Street at the end of September. Business so far has been going well, said store manager Patrick Marks, although Cody's is still tweaking its fixtures and signage.
"It's wonderful," Marks said. "It's also a lot of work."
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