The Show Must Go On: Will Mid-Market's Dramatic Development Attract an Audience?

Through its many incarnations, the Strand Theatre has become a near-perfect symbol of transitions on Market Street. It hosted stage productions from 1917 until 1977, first as part of a chain run by vaudeville showman Sidney Grauman, and later under the auspice of Westside Theatre Company. In the 1990s it screened porn movies and became a den for pimps and crack dealers, who streamed in each night to accost the clientele. A police vice squad raided the building in 2003. It was boarded up for years. The walls crumbled, the roof caved, and rain puddled beneath the rotting seats. The ground floor became a bird graveyard, the upstairs a homeless encampment. Squatters decorated the walls with spray-painted messages: “Junkies for Life,” and “RIP Danny Boy.”

Then, in 2010, Carey Perloff set her eyes on the dilapidated building. Perloff was searching Market Street for space to expand the American Conservatory Theater, where she serves as artistic director. Like much of the surrounding neighborhood, it seemed ripe for renovation.

ACT purchased the building for $4 million, subjected it to a $32.5 million restoration effort, and rendered it the crown jewel of a new Mid-Market development. The new Strand is slated to open in January 2015, and Perloff hopes it will not only bejewel, but also animate, a traditionally blighted area. Large video screens in the lobby will show student films, or simulcast performances from inside the theater, while the windows above will allow a new generation of theater-goers to gaze over City Hall.

“I think it will really anchor this street, and sort of light it up in a way that will really change Market Street,” Perloff says, blue eyes twinkling as she gestures over the steep-banked venue, its aisles still strewn with cement chips and broken chairs. Perhaps if the Strand is really successful, it can even appeal to a new generation of adults with disposable income that sits within spitting distance, and that's become a sort of White Whale for San Francisco arts institutions: The Twitter crowd. Once an old dynasty of angel donors dies out, theater companies will need to convert members of the smartphone generation into patrons.

Perloff has her doubts. “It's definitely — complicated,” she says, pausing a beat as though looking for a more politic word. “Those companies, you know, they work 18-hour days. And they as of yet aren't particularly integrated into the city. You know Twitter's up on the ninth floor and you don't get much sense of it from down below.” She brightens. “I don't think they get exactly what it is yet, but I think when it's here, they'll love it.”

In other words, Perloff believes that if you build it, maybe they'll come. That notion is so integral to the new Mid-Market corridor that it's all but embedded in the city's marketing credos.

On the eve of its estimated $15 billion IPO, Twitter has transformed San Francisco's downtown retail corridor. It's also transformed city tax policies. In 2011, then-interim Mayor Ed Lee enacted the “Twitter tax break,” designed to give companies throughout Mid-Market a six-year reprieve from payroll taxes on new hires. Though the law ended up benefitting many retail outlets, hotels, and craft coffee shops that descended on the area, it originally served as a carrot to keep Twitter in San Francisco. A year later Lee and his billionaire benefactor, Ron Conway, pushed a new payroll tax to voters. When the new initiative takes effect next year, San Francisco will tax companies based on their gross receipts, rather than the size of their workforce. It will bolster tech start-ups — which have large payrolls, light overhead, and little revenue ­— at the expense of other industries.

Yet Twitter and the various tech companies to follow — the social network Yammer, the interior decorating site One Kings Lane, and the software company ZenDesk — also changed Mid-Market indelibly when they moved into a giant Art Deco building at 1355 Market St., now rechristened Market Square. Another crop of them recently descended on a newly renovated high-rise at 1455 Market St., now home to mobile payments company Square, Inc. and the ride-share start-up Uber, which shunted its headquarters there after signing a lease in July. Those changes led real estate experts to dub Market Street the epicenter of a new San Francisco land-grab, a title formerly bestowed on SOMA.

In the past year alone, property values have soared; Perloff says that within months of ACT's $4 million Strand purchase, the adjacent lot sold for $8 million, to a condo developer. Once the domain of greasy spoons, drug dealers, and funky arts nonprofits, the blocks between Powell Street and Civic Center BART stations now harbor Michelin Star restaurants, artisanal cafes, swanky health food stores, and luxury apartments where a two-bedroom can rent for up to $4,700 a month.

It's a rather precarious place to groom an arts district, given Perloff's observation that tech employees haven't traditionally patronized the arts. And yet art is a cornerstone of the Mid-Market campaign; amid the Strand resurrection ACT also opened a new stage in its costume shop next door, while SFMOMA launched a massive expansion to triple its gallery space. Even if that's all just a fig leaf to cover up what's actually a lucrative tech development, many arts organizations have bought into the city's plans on the belief that they, too, will benefit from urban revitalization.

San Francisco is abstractly interested in caring for its old arts institutions, and it generally pins revitalization efforts around them. That's what it did with the ill-fated Fillmore Jazz District, the more promising classical music halls at Civic Center, and all previous attempts to inject life into Mid-Market — most of which revolved around creating a “theater district.” Just as jazz helped sell a Fillmore revitalization plan that flopped, theater is part and parcel of the image being cultivated for the downtown corridor. It's San Francisco's latest attempt to use history opportunistically, as a way to attract modernity.

“It wasn't Twitter that revitalized Market Street,” Lee insisted, holding court at Strand Theatre's ribbon-cutting ceremony last week. “It was the arts organizations. We talk a lot about technology in the city, but technology cannot live without the arts.”


And yet, there's often a serial, repetitive nature to how San Francisco's various “theater district” campaigns have played out. The great romance of San Francisco is to create a city where art, music, theater, and technology all flourish together, but so far, that vision hasn't quite borne out in reality. From a city booster's perspective, that might not matter; the tech sector will generate enough money to bankroll an arts district, even if the two worlds never intersect. Rising land values may cause small businesses and nonprofits to get displaced in the meantime, but that's just the cost of gentrification.

In theory, tech was supposed to shepherd other business into Mid-Market, generate revenue that the city could siphon off to arts programs, increase foot traffic, make the area safer, dispatch employees to work in local soup kitchens or pick up trash, and forge a relationship with the existing community that was largely symbiotic.

San Francisco has seven months left to assess the economics of Mid-Market before its economic development report is due in May; meanwhile, the landscape is transforming. Mayor Ed Lee's critics say he sold out three neighborhoods — SOMA, Mid-Market, and the Tenderloin — to lure Twitter in; supporters say that was the only way he could ensure a successful revitalization. San Francisco's most aggressive, prehensile, government-endorsed gentrification campaign might also be its most fruitful. Or its most pernicious, if swelling property values drive out the very arts district that the city envisions.

Hating on tech companies has become a favorite San Francisco pastime. But it sometimes demands leaps of imagination. Since Twitter allows few interlopers within its gates, the amenities contained within — the rooftop garden, air hockey table, Pilates classes, catered lunches, and full-service cafeterias — have become the stuff of legend. In reality, few people know the inner workings of the companies in Market Square and they, in turn, seem to have little interaction with the world below. The conventional wisdom is that most Twitter employees work 16-hour days, and a recent Reuters article reported the rationale for the move to Mid-Market: that the easy-access location allows employees to go home for dinner and come back to work at night, according to Twitter CEO Dick Costolo. Many San Franciscans believe that tech workers dwell in some kind of cultural isolation, even as their employers change the economy and landscape for everyone else.

That's at least the impression that neighbors glean. Nick Olivero, who runs the nearby Boxcar Theatre, says he's visited Twitter three times, and doesn't understand why the employees would ever leave. “A gym, candy store, free cafeteria,” he writes via e-mail. “The tech companies won't change the nightlife, just appearances of run-down buildings.”

If they're not changing nightlife, they're certainly changing everything else. Over the past year, several luxury housing projects have taken root on Mid-Market, along with a new Market Street Place Mall. Neighborhood greasy spoons shuttered to make way for fancier eateries: Pearl's Deluxe Burger took over a storefront once occupied by the Market & 6th St. Food Corner (known for its sign advertising pizza-spaghetti and lumpia burritos), and in February, four-star restaurateur Daniel Patterson signed a lease for the building that once housed the Iron Wok Chinese Restaurant. Meanwhile, a French-inspired brasserie and high priced grocer moved into the Market Square building. A craft brewery opened in the ground floor of the Argenta Building at Market and Polk streets, and a phalanx of new office condos in the Warfield Building will soon house Benchmark Capital and the music start-up Spotify. A 17-year-old Himalayan imports shop held its going-out-of-business sale last month, while the owners of Kaplan's Surplus & Sport Goods geared up to sell their building. Police even cracked down on the chess tables between Powell and Civic Center BART stations, in an effort to curb drug trafficking and make the area more pedestrian-friendly.

The list goes on and on. Around three dozen development projects are underway, in an effort to fulfill former Mayor Gavin Newsom's vision of Market Street as the Champs-Elysees of San Francisco.

That's a marked improvement for the traditionally depressed area, which was long subject to desperate, half-baked revitalization campaigns. In 2005, San Francisco's Redevelopment Agency conceived a grand plan to rehabilitate Mid-Market, using eminent domain to acquire vacant properties and turn them into affordable housing units or retail spaces. Once the agency passed its plan off to the Board of Supervisors, it foundered. For years afterward, the whole area languished, as did all investment in the city. Tenderloin Housing Clinic founder Randy Shaw contends that while the 2005 revitalization was ill-advised — it's dicey for a local government to divert taxpayer money to private developers — it may have been moot anyway, given that 2008, 2009, and 2010 were “economic dead years.”

Historically, Mid-Market just hasn't had a ton of enticements to draw in the 65,000 people who flock to Powell Street BART station and its cable car turnaround each day, says erstwhile real estate mogul David P. Addington, who once owned the Warfield Building. In 2009, Addington introduced a fruitless ballot measure to install billboards on the properties between Fifth and Seventh, which, he said, would bring in revenue but also turn Market into a mini-42nd. (Needless to say, Addington owned several of those properties.) Though the measure flopped, Addington's 42nd Street illusions lived on.

“Only a limited number of people ever cross Fifth Street and go west,” he says. “If they did, then you could create an arts theater and entertainment district on par with the finest in the world.”

That wasn't the last gasp for abortive transformation plans. In 2010 Newsom announced plans to resurrect the redevelopment strategy that failed five years prior, holding a press conference at Show Dogs, a new gourmet wiener eatery adjacent to the Warfield. By pooling $11.5 million from city coffers with federal loans from the Department of Housing and Urban Development, Newsom planned to create low-interest loans for businesses, which in turn would turn the phalanx of neighborhood stereo outlets, homeless encampments, and strip clubs into a “cultural district.” Although development efforts still doddered along, Newsom saw a couple of small victories that year — namely, the opening of Blick Art Materials on Sixth Street, in a storefront that once harbored a smaller competitor, Pearl Paint. Newsom turned the ribbon-cutting into a coronation, calling Blick a new “economic catalyst” for the neighborhood.


And so, through many cycles of death and regeneration, the Mid-Market arts district pipe dream persisted in San Francisco.

It wasn't until Lee and a coterie of other city politicians persuaded Twitter to move into a gutted Market Street furniture store that the long-deferred revitalization plans actually took shape. And it required something of a Faustian bargain. Over the past three years, city officials have bent over backward to keep tech firms happy. In 2012, San Francisco lost $14.1 million in potential revenue from tax breaks. Paradoxically, business tax collections also increased by 12 percent, a figure that tech-boom enthusiasts link to the newly stimulated economy.

And yet, by some measures, the city's love affair with tech has the cast of a handshake deal; tech companies get to expand their workforces with impunity, and in return, they've helped fund playgrounds, kept streets clean, and bring thousands of people to a once-sterile downtown.

At the same time, San Francisco squired various arts organizations and small businesses into the Mid-Market fold, trying to create a downtown that hews to the city's self-image. Ever-mindful of rising property values, the city is taking a more interventionist approach than it has in previous years, according to Amy Cohen, director of neighborhood business development for the mayor's Office of Economic and Workforce Development. It's used a constellation of public-private partnerships to bankroll storefront improvements and loan programs, and it helped the Strand secure a federal tax break by creating a for-profit entity under the aegis of ACT.

But it's just one of many venues. Between the Golden Gate, Cutting Ball, EXIT, ACT Costume Shop, Boxcar, and Orpheum Theaters, not to mention nearby art spaces Bindlestiff Studio and Intersection for the Arts, Mid-Market has several thousand seats to fill each night. Addington doubts that another 300 at the Strand will be the tipping point. “We have about 10,000 seats here,” he says, “and then you go beyond the Strand and you have Davies Symphony Hall and the Opera House — that's another 10,000. So now we're up to 23,000.”

He worries it may be a tall order to put people in all of them. To housing activist Randy Shaw, that's inconsequential. So long as San Francisco nurtures its tech sector, it can always graft an arts district on top. If that means arranging sweetheart deals for tech companies, then so be it.

“Market Street's economic function was historically theaters,” Shaw explains, “but they all closed by the 1960s. … You can't just have theater be the driving force. There has to be private sector investment.” He points to the benefits that Twitter created for Mid-Market, first by inducing local real estate firm Shorenstein Company to rehab a historic building, then by paving the way for residential development, which in turn created a new tax base. “We've had a number of other booms,” Shaw says, “but no one was building at 10th and Market or 100 Van Ness.”

Others, like former Supervisor Chris Daly, see it differently. In his eyes, Lee's plan for Mid-Market eerily parallels the '90s-era gentrification of San Francisco's Mission District, which allowed white hipsters to effectively colonize a working-class neighborhood. Daly says he felt the effects of the Mid-Market boom firsthand, when rising property values forced him to shutter the bar he owned at Market and Gough streets. He's still bitter about it.

“When folks ask what happened to Buck Tavern,” Daly says, “I just tell them I got Twittered.”

NEMA, the glittering cluster of high-rises that recently opened on 10th and Market streets, purports to be something called a “lifestyle pioneer.” (NEMA stands for “New Market.”) With its outdoor heated pool, full-time concierge desks, saline pool, electric car charging stations, oak-paneled solarium, and abundant Apple TVs — gadgets are the doilies that decorate the architecture — the buildings seem breathtaking and aspirational, a perfect monument for San Francisco's noveau riche. The apartments have quartz countertops and roller shades on the windows; the outdoor terraces afford sweeping bay views; Siri's soothing, computerized voice wafts through the elevator. An 800-square-foot one-bedroom goes for about $3,400 a month.

NEMA sits blocks away from a homeless encampment at Civic Center Plaza that has bedeviled city boosters for years. It's a giant open expanse where people gather on squares of perfectly-manicured grass, arranging their possessions on large plastic tarps or stuffing them in garbage bags. Some particularly enterprising folks hawk packages of room deodorizer or laundry detergent, or boxes of cookies. The fountain there is a pile of stone guarded by police barricades and caution tape. On a recent Friday night, in true San Francisco fashion, a homeless man strode through the area wearing an “I Love NPR” T-shirt.

While most of the crime in that area falls in the “quality of life” category — public urination, littering, unpermitted vendors blocking the sidewalk — it's historically been enough to stymie development, according to Jim Sangiacomo, head of Trinity Properties, who says he was only too happy to see “young techie” pedestrians infiltrate Mission and Market streets in recent years. And the homeless population downtown seemed only to swell — or at least become more visible — with the 2010 closure of the Transbay Terminal, which left much of the city's underclass without an enclosed place to sleep.

The problem, according to Sangiacomo, is that two parallel universes collide at Market Street — that of the well-heeled and that of the indigent — and yet those two worlds are interdependent. San Francisco's prospective main street is surrounded on all sides by social service agencies, which, property owners say, bring more needy people to the area. “You have them on the south and on the north,” Sangiacomo says. “You have Glide Memorial and St. Anthony's dining room in the Tenderloin. They get their checks from the General Services Administration on Mission and Eighth streets. It's this circular area of people going back and forth all the time.”


Yet the agencies also help reduce San Francisco's homeless population: between 2009 and 2011, the number of homeless people on the street and in shelters decreased by more than 500, according to the city's homeless count. Without social services, the open squares by Civic Center and Powell Street might become so overrun that tourists, pedestrians, and theater-goers would never set foot there. Now, with commercial rents rising and luxury condos becoming the new normal, many nonprofits say they are in danger of becoming homeless themselves.

San Francisco has long striven to help its less fortunate, and its municipal policies often reflected that do-gooder ethos. Back in the '60s and '70s, when the closest things to Google were call-in switchboards or Yellow Page phonebooks, San Francisco administrators made a concerted effort to build their nonprofit infrastructure. In large part, they accomplished that by contracting with nonprofits for most social services, says Mark Burns, deputy director of the city's In-Home Supportive Services Consortium.

“If you go back historically,” Burns says, “the city took out all the contracts with for-profit companies, and replaced them with nonprofits.” He adds that the latest push for commercial development is anathema to San Francisco's former vision of itself. “The new policies coming out of City Hall… are done on the backs of citizens who the city purports to welcome and be inclusive of.”

Meaning commercial development has grown so rapacious in San Francisco that some social service agencies can no longer afford to operate here. Some are already migrating to Oakland, according to Burns. Which raises the question of whether the indigent and low-income people who use those organizations — the people with no assets, whatsoever — will get priced out, too. If anything, fewer available services beget more homeless people, says Nancy Nielsen, deputy director of Lutheran Social Services of Northern California. And that could create serious problems for the developers trying to resuscitate Mid-Market.

Such culture clashes are less troubling than the prohibitive rise in commercial rents, or the cost of living there in general. If places like NEMA become the new norm, then the whole funky infrastructure that San Francisco built 40 years ago may be doomed. Now, many nonprofits and arts organizations — including the ones that help bejewel the city's “arts district” image — depend on the generosity of landlords who aren't necessarily looking to become philanthropists.

Veterans of the nonprofit sector see eerie parallels to the dot-com boom of the '90s, when rapid property appreciation drove the first wave of have-nots to Oakland. Not only are landlords eager to fill ground-floor spaces that languished during the recession, they're also able to command much higher prices. And because most direct social services don't have the luxury of moving out of town — “you may as well move out of state,” Jeff Bialik, executive director of Catholic Charities, says — they're often stuck sparring with a much more desirable class of tenants.

“We'd been renting a space in SOMA for 8 years, and during that time our landlord found a tech client who offered double what we were paying,” Nielsen says, explaining why her group now has its sights on a large, dilapidated eyesore of a building that needs about $400,000 in rehab. “The landlord is willing to keep rent at an affordable rate, and pay up to a quarter of the build-out cost,” she adds. “But he isn't going to pay $400,000, and we don't have that money just sitting around.”

City administrators and their nonprofit counterparts have floated many proposals to address the problem. One would be for the city to absorb the overhead costs for its social services programs, which would essentially double its burden: After forfeiting payroll tax revenues from the Mid-Market tech companies, it would then tack on the cost of running all the social services that could no longer afford to rent there.

Another option would be to set aside some tax revenues from commercial leases and create a fund to underwrite nonprofits. Perhaps the most logical would be a swap-off: For every hundred thousand feet of commercial space, the city would have to set aside a certain number for social services, priced below market rates.

The only other option would be some kind of scorched-earth policy to drive all of the homeless out of town, creating the kind of high-priced urban district that could shift the whole culture of San Francisco. (Recall this is a city that routinely passes bond measures for supportive housing.) And if real estate prices are endangering social services, they'll soon put shoestring arts organizations at risk, too.

San Francisco isn't a monolith. Even if many of its policies coddle tech companies, there's still a strong progressive bloc on the Board of Supervisors, and an Office of Economic and Workforce Development set up to protect nonprofits and artists. Yet they can't control the vicissitudes of a hot real estate market. Property values might rise so high that even good intentions can't stem the tide.

With so many other neighborhood nonprofits facing the same predicament, Nielsen and others worry that arts organizations won't survive, either; the going commercial rate of $50-$60 a square foot per year would prove challenging for any tenant without a nest egg or a viable revenue stream. Even nonprofits that sell tickets, such as art museums or theaters, often rely on underwriters or private donations to pay at least part of their overhead. Private funding doesn't typically rise with inflation.


Boxcar Theatre faced the downside of a booming real estate market this year when its landlord announced plans to sell the Tenderloin building that houses its office and studio — the same one that the City's Office of Economic and Workforce Development helped it procure in 2010, with a $20,000 subsidy for renovations. If the building sells, and its new owners aren't interested in harboring a theater, then Olivero might have to find cheaper digs in SOMA or the Mission — areas that, he says, are quickly becoming unaffordable.

The theater's much older peer, Intersection for the Arts, was similarly imperiled after getting priced out of the newly gentrified Mission District. Two years ago, Intersection moved to a mixed-use office space in the Chronicle building called Impact Hub, which describes itself as “part innovation lab, part business incubator, and part community center”: The space holds 125 work stations, a slew of dome-shaped conference rooms, and kitchens with kombucha on tap; Intersection's roommates include Presidio Graduate School, the managing consultant firm Schaffer & Combs, and most recently, Yahoo. To an outsider they all seem like strange bedfellows, even if the tech companies moved in, ostensibly, to live cheek-by-jowl with a younger creative class. Intersection's interim executive director Arthur Combs touts the arrangement for being both inventive and sustainable, but program director Sean San Jose is more guarded.

“It's two neighborhoods to learn — the outside one, and the one in this building,” San Jose says, noting that some of the building's features don't befit a performing arts space. In a curious irony of old-world protective infrastructure meeting the new sharing economy, Hearst Corporation, which owns the property, has everything shielded behind double-layer glass doors with security pass-codes. Such architectural features strike San Jose as vestiges of “an old fascist regime.” He's reserving judgment on the shared-office-space model, which has kept Intersection alive, but might also constrain its programming — from an observer's standpoint, at least. (You can only do so much with a modular stage and a communal floor plan.) “This idea of being a center for innovation — we're still actually learning how that works,” San Jose says. “You can't put two languages together and expect that we'll automatically say the same things.”

A native of San Francisco's Mission District, San Jose is still somewhat bewildered by the changes happening around him. “Our minds are a little wrapped around trying to get the Google people to watch our things,” he says, crossing one tattooed arm over the other. “Like, you get the tax break, you get the real estate. Are you gonna invest back in the community?”

That might not matter for institutions like the Strand, which already has a bevy of angel donors and a $32.5 million capital campaign behind it. At last week's ribbon-cutting, Mayor Lee stood woodenly beside State Sen. Mark Leno and Supervisor Jane Kim, promising a crowd of reporters and MFA students that, contrary to conventional wisdom, art begat a tech sector — not the other way around. “Without the arts, I don't think the technology sector would want to be here,” Lee said.

To many artists, that might be a point of contention. Yet Perloff seems to have accepted the credo that you can build it, and perhaps they won't come, and maybe that's okay. The Strand, is just one element of a district that itself resembles the stage set for a theater, with the constant scene changes, and the political actors flitting in and out, and the long-time residents looking more and more like a Greek chorus. San Francisco is, after all, a city besotted with theater districts. Or at least with the idea of them.

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