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Posted Sep 8, 2020, 10:33 PM
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Registered User
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Join Date: Dec 2016
Location: San Francisco
Posts: 24,177
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Quote:
Vacancies on Hayes and Fillmore Streets prompt argument for relaxing the rules on chain stores
By Alex Barreira – Staff Reporter, San Francisco Business Times
Sep 4, 2020, 10:46am PDT Updated Sep 4, 2020, 2:14pm PDT
Along Hayes and Fillmore streets, two of the highest demand areas for San Francisco retail, it's rare to see more than a few spaces available at one time, and they're typically accompanied by a long line of prospective tenants. But the environment created by the pandemic and San Francisco's cautious reopening has led to a new normal: dozens of empty storefronts for the taking.
. . . 23 businesses in the neighborhood have folded, many of them small legacy mom-and-pop stores. Among the casualties are restaurants like Barcino and The Grove, and retailers including Nancy Boy, Vers Unica, Welcome Stranger and Kipper Clothiers.
Pam Mendelsohn, partner at real estate firm Maven Commercial, said she's never seen this many spaces available at once — more than two dozen between Hayes and Fillmore streets, and additional vacancies on the side streets directly off the main drags.
Where she's seeing the most interest in filling them is from midsized chain businesses — those with 10 to 30 locations, capital to spend and the motivation to break into some of the city's highest-demand neighborhoods when landlords on the whole are more flexible with rent and improvements. These businesses are often from out of town and unused to San Francisco's regulatory environment, particularly its restrictions on chain stores . . . .
Hayes Valley is one of three neighborhoods in San Francisco, along with Chinatown and North Beach, with a wholesale ban on formula retail, defined as more than 11 outlets worldwide. On Fillmore Street and in other neighborhood commercial districts throughout the city, a chain with more than 11 stores requires a conditional use permit exemption through the city's Planning Department. This process can drag on for months and lead to exorbitant costs in accumulated rent before approval. It can also get messy, presenting an opportunity for NIMBY voices to pack the halls at public hearings . . . .
However, there's little sign of the rules being loosened.
Last month, the Board of Supervisors passed an ordinance designed to expedite the conditional use permit process for some forms of commercial spaces — but excluded formula retail applicants from the change.
"It's always easier to look at the well-capitalized national and local chains during economic hardship," said San Francisco Supervisor Dean Preston, who represents Hayes Valley as part of District 5. "I don't think we should be transforming the character of neighborhoods that work so hard to be corridors for mom-and-pop businesses and allow them to be open to chain stores."
In Hayes Valley, the chain store ban in place since 2004 continues to enjoy support among some existing merchants and the community.
"This is the time to try new ideas, not more chain stores," said Gail Baugh, longtime Hayes Valley resident and former president of the neighborhood association. With foot traffic recovering as people work from home and commercial rents falling, it opens more chances for local businesses to find space in the neighborhood, she said . . . .
[Lloyd] Silverstein, who runs the neighborhood association's merchant group, said he would be open to some amendments to the ban that would allow chain retail off of the main corridor for businesses like banks or hardware stores that serve community needs, or loosening the restrictions for international chains with little to no U.S. presence.
Over the years well-funded startups with chain ambitions have learned how to navigate around the formula retail ban in Hayes Valley anyway, by prioritizing the neighborhood as one of their early locations. So it went with Away, Warby Parker, Allbirds, Madison Reed and others. Even Gap Inc. scored a store on Octavia Street, now shuttered, for its men's fitness wear brand Hill City by setting it up as a separate operation.
Silverstein said that the community should either find a way to close that loophole or, if not, embrace the destination retail status that the neighborhood has achieved in recent years . . . .
"I don't want my neighborhoods full of chains either, but there are good uses and bad uses," Mendelsohn said, adding that there's a difference between a multinational chain and regional one with 15 or 20 locations. "The word is out — 'Don’t come to San Francisco, it's costly, expensive, and it takes a long time...' The lineup of people who wanted to come here and go through that process has diminished greatly."
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https://www.bizjournals.com/sanfranc...pIYmoifQ%3D%3D
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