Shrinking the Retail Wasteland

San Francisco officials propose new laws around retail vacancies, while speeding new businesses through the permit process.

In an attempt to curb retail deserts across the city, San Francisco leaders introduced two complementary proposals to crack down on vacant storefronts and speed up the permit process to bring in replacement shops.

Supervisor Sandra Lee Fewer brought forward legislation on Tuesday that could help identify the full extent of the problem, which has been obscured by previous counts from the Department of Building Inspection (DBI). Going forward, the city’s building code would no longer allow a simple “for lease” sign in the window to exempt a storefront from being considered vacant — which could result in dramatically different reporting numbers.

DBI has registered just 40 vacant storefronts in the last year, according to Fewer’s office. After seeing a department report that registered 25 vacant retail storefronts citywide in 2016 but none in the Richmond, Fewer led a crowdsourced count in April that identified 156 empty spaces in her district.

“You don’t have to spend more than five minutes walking down the Clement, Geary, or Balboa corridors to see four or five vacant storefronts on a block, and it’s even worse in other parts of the city,” Fewer said at the Board of Supervisors meeting Tuesday. “When you have commercial property owners holding multiple storefronts vacant for long periods of time, that hurts all the other small businesses in the area who rely on a vibrant commercial corridor to attract customers.”

If her plan passes, building owners would be required to register empty storefronts with the city — and pay the annual $711 registration fee within 30 days, rather than having a 270-day grace period. Those who do not comply after receiving a warning will be charged another $2,844 — four times the initial fee.

DBI will also conduct annual inspections of vacant or abandoned commercial spaces and maintain a registry that the Office of Economic and Workforce Development (OEWD) has quarterly access to.

Mission Street leads in vacancy rates, with about 14 percent of total storefronts between 2016 and 2017 considered empty. An OEWD report on the “State of the Retail Sector” released in February found that 24th Street followed, with nearly 10 percent of its storefronts empty. Ocean Avenue hovered just above nine percent.

Church Street wasn’t included in the report, but in April, SF Weekly counted at least 10 empty storefronts on a once-thriving block between Market and 15th streets. Remaining retailers, like the soon-to-shutter Aardvark Books, say fewer customers had come by in recent months. As the OEWD report found, businesses rely on one another for economic health; adding to one another’s foot traffic and a mix of uses makes for a healthy business district.

“There are just fewer people coming into the neighborhood, because there’s fewer things to do in the neighborhood,” said longtime Aardvark employee David Lugen in March. “I don’t ever remember seeing a vacancy in the Castro — this is a fairly new thing.”

Supervisor Vallie Brown’s office is also working on legislation related to storefronts. Together, Brown and Mayor London Breed announced a new influx of almost $1 million to provide services for small businesses and to investigate a space that sits empty. The Mayor’s office did not specify where these funds would be allocated from but said it would be possible by “leveraging existing city programs.”

Services would include lease negotiations and case management services with the idea of filling a pipeline of potential retail tenants. But the pair’s strategy largely revolves around helping new shops get through the permitting process faster, while allowing greater flexibility to mix and match businesses under the same roof. (It’s worth noting the parallels to Breed’s homelessness policies of expediting permits to build housing.)

“It’s old news that retail is changing,” said Brown before the ordinance she co-sponsored was approved in November. “We need to support our merchants as they adapt. It’s important that we as a city don’t get in the way of those changes.”

If the proposals are a response to the proliferating commercial vacancies that devitalize neighborhoods, it’s unclear how all new stores sped through the permitting process will thrive amid retail’s national decline. The OEWD report confirmed this trend, citing competition with e-commerce and a shift of money spent on objects now spent on experiences and at places like fitness studios.

But owners of existing storefronts, such as David Quinby of The Riptide on outer Taraval Street, say the process is riddled with conflicting instructions from different departments, and a financial drain. In The Riptide’s case, a 2015 fire meant fundraising from its loyal Outer Sunset customers to build the bar back up from the ashes.

“Those of us that create these small businesses often operate with very limited resources,” Quinby said. “This new initiative from Mayor Breed is a game-changer for us.”

In November, the Board of Supervisors unanimously approved an ordinance that allows different types of businesses to operate in the same space. Arts activities, limited restaurants like cafes, general retail, personal service, retail professional service, and trade shops can mix and match starting in 2019. A good example of the retail environment to come may be San Franpsycho’s Inner Sunset apparel shop, with its miniature coffee and ice cream bar.

Pop-up shops can also obtain a 60-day permit to test the waters before committing to a lease. The ordinance applies to districts 1, 4, 5, 10, and 11 — neighborhoods like the Sunset, Richmond, Western Addition, Bayview, and Ingleside.

Brown introduced additional legislation on Tuesday that would build on the November ordinance, such as allowing restaurants to rent space when they are closed. Though Fewer’s office was not aware of the planned proposal, legislative aide Ian Fregosi says they support the supplemental legislation.

“The enforcement mechanisms in this legislation are vital to addressing our vacancy problem head on and complement ongoing efforts to streamline permitting and increase retail flexibility so our small businesses can thrive,” Fewer said.

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