Castro Not Immune to Retail Struggles

The surprising amount of empty storefronts in the Castro has slowly attracted attention to struggling retailers citywide.

As a major attraction for tourists, it would be easy to assume that Castro retailers could withstand the nationwide trend of online shopping that is decimating brick-and-mortar shops. Instead, it’s served as an unexpected canary in the coal mine when it comes to vacant storefronts in San Francisco. While the city’s Office of Economic and Workforce Development reports San Francisco has an overall 3.2 percent vacancy rate, the Castro has a 12.8 percent rate, according to a 2017 count by Hoodline.

This year alone, market hall The Myriad left Market and 15th streets for North Beach, consignment shop Worn Out West 2nd Generation on Market Street closed, and Snowbright Launderette on 14th Street also closed.

Hoodline’s count is an update to the 2015 Castro/Upper Market Community Benefit District (CBD) report that showed an eight percent vacancy rate, or 33 empty stores. Now, neighborhoods like the Richmond District are calling on neighbors to count vacancies after the Department of Building Inspection reported zero vacancies in 2016.

“It was really the beginning of the city taking notice about commercial vacancies,” said Castro/Upper Market CBD Director Andrea Aiello of the 2015 report. “It had to become more of a problem in other neighborhoods.”

Even within the Castro, some areas are visibly more hard hit than others. As SF Weekly previously reported, the area of Church and Market streets currently has at least 10 vacant storefronts, creating a vast, quiet stretch of street on what’s a busy pedestrian and commuter corridor.

The name Veritas Investments — which owns 48 buildings that contain retail space citywide — comes up often among shopkeepers in the area. Some former store owners in the area, like Marie McCarthy of Fiat Lux, faced turbulent management and dramatic rent increases once their building was sold to Veritas, causing them to relocate. And despite the popularity of Crepevine’s Church Street location, it shuttered in December due to a rent increase.

“They had been there for a long time and had a dedicated clientele,” McCarthy said of Crepevine. “I just think it reflects the atmosphere in S.F. where there are so many vacant spaces without businesses that can support the enormous rents.”

In the case of Church and Market streets, Veritas Asset Manager Justine Shoemaker pointed to retrofitting and the Planning Department process as cause for the slow repopulation of businesses. Over the next couple months, fitness studio The Boombox, North Beach’s Il Casaro Pizzeria, a realty office and a pop-up gallery space will open in the area.

But the Castro isn’t the only neighborhood suffering a significant loss of retail. As more empty storefronts are being counted other neighborhoods like the Richmond District and Noe Valley, lawmakers are looking at ways to prevent prolonged vacancies once a business moves out or a new owner takes over.

Last month, Supervisor Jeff Sheehy, whose district includes the Castro, told SF Weekly that changes to the 2009 Vacant or Abandoned Building Registration Ordinance could help.

Hiring more Department of Building Inspection workers would ramp up enforcement rather than rely on complaints like the ordinance does now. And since property owners pay fees to cover inspection costs, they would be the ones paying for additional workers.

Another part of the ordinance Sheehy is looking to amend is exempting owners of empty buildings who have a broker, which doesn’t necessarily mean it’s being marketed for rent. Though he wishes to be careful to not penalize owners who are marketing their property, other owners won’t have that incentive to let it sit empty and charge higher rents later on.

Sheehy and his staff still have some research to do but expects to introduce legislation in the next couple months.

“It’s something we’re trying to bring forward as quickly as we can,” Sheehy says.

In the meantime, Aiello points to personal shopping choices that could keep the remaining restaurants and businesses open.

“Residents still have to continue to shop local,” Aiello said. “They also really can’t survive without the tourists.”

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