Including a couple of spurs down Fillmore and Webster Streets, such as the space which Shake Shack has been eyeing to become their first outlet in San Francisco, as we first reported last week, the number of vacant storefronts on the Union Street corridor has ticked up to twenty-two (22), which doesn’t include the soon to be shuttered Lucy (which is to become a North Face concept store) nor at least three other spaces which are in the process of closing or quietly seeking new tenants.

And as newly cataloged and compiled by a plugged-in tipster, at least one of the spaces, the former Luisa’s at 1851 Union, has been vacant since the end of 2012 and ten (10) of the above have sat shuttered since the end of 2016.

83 thoughts on “Union Street Vacancy Count Ticks Up”
      1. That place was awesome. On halloween when the trick-or-treaters would come to that store, the kids would have to pick candy out of a toilet…

    1. Ground floor retail is great, but you need to design the housing above it to have high enough density to support an urban street.

      1. As retail continues to shrink due to Amazon/Walmart/etc, we may need fewer of those spaces in general.

        Which isn’t a problem–we can use the space for more housing.

          1. Years ago, every building along residential corridors of high-density housing had stoops—you see them in New York, Chicago, and here in San Francisco. When designed well, people use them and they provide plenty of street-level activation, and they have the added benefit of encouraging human interaction, rather than rampant consumerism.

    2. The problem here isn’t ground floor retail space, it’s ground floor retail space that cannot be used (or at least is severely restricted) to open new bars and restaurants. Chestnut Street and Hayes Valley are booming with virtually no vacancies, because entrepreneurs can open popular restaurants and bars. The people living near Union Street don’t want/need jewelry stores and dry-cleaners, they want hip new places to eat and drink.

      1. good point, but there are also way too many vacancies on Valencia, Castro, etc. all sings of a system that incentivizes landlords to keep spaces empty rather than convert to housing / active uses.

        1. On the other hand, the Castro permits converting ground floor garages in residential buildings *into* restaurants and bars, which has been quite successful along 18th St.

    3. I note that one commenter to your post said that stoops on the front of buildings would help because stoops “encouraging human interaction.” The website did not provide a “Reply” button with which to respond to that post there, so I am responding here.

      I cringe when I think of the kind of “human interaction” that would take place if San Francisco buildings had stoops these days. It’s either a different world now than when SF buildings had stoops or I’ve grown cynical because of the prevalence of the misbehavior and the defacing of property that I witness every day on the streets.

      The prospect of having stoops on our buildings is a lovely thought but I respectfully disagree that they would work again in San Francisco. Sadly, even an upscale area like the Union Street corridor would not be immune from inconsiderate sidewalk behavior.

      1. Cynical is not the right word. You are uncomfortable. New York and San Francisco have fantastic communities where people do interact from their stoops and it does bring neighbors together. You cringe at the thought of the interactions that would occur and wrote “human interaction” in quotes. I cringe at the thought you live in my city. Respectfully leave San Francisco and find a place where you aren’t forced to suffer inconsiderate sidewalk behavior in upscale neighborhoods or witness misbehavior or interact with undesirables. You are the divide the stops change.

    4. “I’m starting to change my mind about the importance of ground floor retail.”

      You’ve apparently already changed your mind about the importance of the theory of supply & demand. In Econ 1, you were told that supply & demand push prices to toward a market clearing equilibrium, so oversupply should lead to lower prices until the oversupply clears. The immutable “law” of supply & demand is always cited as the reason for higher prices on thw way up, so why doesn’t this work in reverse? (rhetorical question – we all know the real reasons why LLs don’t lower rents).

      Instead of giving up on ground floor retail, how about letting price discovery work its magic? Maybe the problem isn’t ground floor retail per se. Maybe the problem is the absurd rents LLs now expect, and the solution is to lower rents until ground floor retail can once again spend the historical normal % of its income on rent.

      Of course, lowering rents would cause a bank meltdown, and we can’t have that, so we better get used to our streets growing darker and more inhospitable.

      1. Supply and demand is why I’ve changed my mind. There isn’t enough demand for ground floor retail, compared to supply. More and more, people are buying stuff online.

        That being said, Union Street’s problems seem specific to its neighborhood association running restaurants out.

        1. Nice use of tautology and circular reasoning. You can’t explain why rents aren’t crashing in the wave of increasing supply (vacancies). According to S&D, prices should drop until the excess supply is taken up. Instead of addressing why prices have not plummeted, you take the first exit to tautology, and say there’s insufficient demand. With this kind of circular reasoning and cherry-picking of S&D theory, you can always “prove” your point.

          1. Seems clear enough to me. There isn’t enough demand at the prices landlords are charging.

            If a landlord would rather leave the space unrented, that’s the landlord’s decision. They are choosing not to lower rent. That’s not S&D’s problem. That’s their problem.

          2. Right! In other words, conventional supply and demand theory DOESN’T ACCURATELY MODEL RE MARKETS! Thank you for agreeing with me!

          3. Not sure what you’re talking about. There are three factors: supply, demand and price. Here, there isn’t enough demand to fill these spaces at the prices the landlords are asking, so they’re empty.

            Why don’t the landlords lower prices? You have to ask them. That’s their decision.

          4. er, jimbo have you walked around upper Market lately? There’s a glut of vacant ground floor commercial space. Yet, curiously, prices don’t come down, and long-time businesses keep folding after their rent quadruples.

          5. That’s why we need to fine landlords for keeping properties vacant. Especially something like ground floor retail. A payment of 1/12 of 1% of the market value of the property for every month a ground floor retail space is left unoccupied would fix this and incentivize landlords to lower asking prices until the market clears.

  1. Maybe the area is too reliant on tourism? Tourism is doing well but Union Street is not the only game in town or the Bay Area. As an SF resident for most of my life I have been to Union Street twice. I don’t know of locals who go there – but for those who live just blocks away.

    I take my car for maintenance to Burlingame. There is a beautiful quaint downtown there. Many restaurants but also many shops. I was there just last week and walked the “downtown” as I waited for my car. There were few vacancies. The streets are clean and bustling. The health of Burlingame’s retail core may lie in the fact it is not a tourist destination. Locals from Menlo Park to San Mateo frequent the area and keep it bustling. That is something Union Street seems to lack. That and being too touristy. It draws too many upscale stores (from looking at the photos above) and doesn’t look to have the broad diversity of shops and restaurants one finds in Burlingame. I would never go to Union Street to shop or eat, but I do go to downtown Burlingame once a month or so to do exactly that.

    1. Away from the wharf, the cable cars, the boats to Alcatraz as well as Market Street and Coit Tower – I wouldn’t consider this area a tourist destination. If the businesses here relied on tourism, I can see how they would fail. I don’t have numbers, but I think tourism is continuing to be strong in San Francisco.

      1. IMO, Union Street has more or less been a target for Marina/North Beach/Russian Hill/Pac Heights residents for shopping, dining, and entertainment. Makes one wonder what these people are up to instead…

    2. The truth is that there is nothing else to do in Burlingame except walk around “downtown”. Lots of alternatives in SF.

    3. No better auto service in the Bay Area than Union Street Garage @Franklin. Tell John I sent you.

      Try a real urban hangout like Perry’s three blocks away while you wait.

    4. I would not call Union Street a top tourist destination. I live right off of it. I walk along Union Street daily, and I often see the same people walking and shopping. The commercial corridor primarily serves people who live in the neighborhood, though the scattered nightspots attract a wider crowd in the evenings.

    5. This is kind of hilarious. Downtown Burlingame is filled with outposts of popular San Francisco places — Crepevine, Limon, Delfina, La Corneta, Philz, and more – it really struck me the last time i was there that it was SF south.

      1. yes, it is maybe the recent decade that SF and the Pennisula have converged culturally to some extent with the Pennisula becoming more interesting and SF becoming more bland. San Mateo has a Blue bottle and Fieldwork outpost now

  2. Union Street is hardly a tourist destination. Vacancies are indicative of the overall retail climate in many parts of the city, including changing demographics and shopping preferences.

    Locals from Menlo Park and San Mateo also shop in Menlo Park and San Mateo. Just sayin’.

    1. Years ago, the Golden Gate Valley residents association got the City to impose rules that slowly eliminated restaurants on Union St & nearby Fillmore.. Basically, if a restaurant closed and a non-restaurant took its place it couldn’t return to restaurant use later.

      Fewer restaurants = less consistent overall foot traffic, particularly at night.

      The rules were loosened a few years ago, but it will take a long time, if ever, for the street’s recovery to happen.
      No such rules on Chestnut.

      1. Totally the culprit.

        This is nothing but pure anecdote, but my wife and I were at Tipsy Pig on Chestnut for brunch last weekend. While waiting for our table, my wife realized she needed mascara and to touch up her eyebrows, and ran to Benefit. I ran to GNC because I was running low on vitamins, and then we went together to Walgreens after the meal to grab some household stuff. If it wasn’t for that trip, we probably just would have ordered it all.

        What’s notable is that Chestnut was hopping. There were people in all the stores, the waits at most restaurants was spilling out into the street and the sidewalks were crowded.

        Go up a few blocks to Union…tumbleweeds. No restaurants, no cafes, no people. No people, no casual drop-ins to neighboring stores.

        Union Street/Cow Hollow created their own problem by restricting restaurants. Exactly what THD are trying to do to the Jackson Square area right now.

        As we shift toward a service based economy with most retail occurring online, people will be drawn to restaurants, cafes, and bars, and then stop by cute stores because they were already there.

        If Union relaxed their rules regarding restaurants, half these storefronts would be snapped up. Chestnut, Hayes, Valencia, even Divisadero in NOPA are chock full of successful restaurants and bars that draw foot traffic.

        1. I live of off chestnut street and this past year I have been noticing that sidewalks are so crowded to the point that you have stop for a couple seconds and wait for the other people to pass on the weekends. They built bus bulbouts that extended the sidewalks on Pierce street on both sides and its been a really welcome addition. I wish the sidewalks were that wide all along Chestnut. There has been some talk before about making Steiner between Lombard and Chestnut pedestrian only (least one day a week), maybe its time to bring that discussion back alive.

          1. I saw that sidewalk extension at Pierce and Chestnut, thought it was really nice! Years ago I lived at Pierce and Capra and it was nice to see the sidewalk extended. If anything Chestnut feels more vibrant than it did 5 years ago. It did feel more crowded than in the past.

        2. Agreed and well put. Cities restrictions is main culprit. If use restrictions were relaxed spaces would fill.

  3. I love Union Street and Chesnut. I meet a friend who lives down on Avila often and we usually have lunch or dinner on Union. The Triangle is hoping on the weekend.

    I would be concerned if there was not foot traffic on Union but there is constant traffic. With the Marina down the Street and Pacific Heights up, the wealth in the area is there. But ten again, true San Franciscans support their local retail and there is no need to travel to the suburbs.

    1. Guess I’m not a true San Franciscan then. Though I do shop at Safeway on DH and occasionally go to West Portal (which does bustle) and Stonestown.

      1. I guess. I don’t live too far from Stonestown / West Portal but try to advoid. Will only get busier when they develop the Macy’s site at Stonstown.

    1. “Sticky rents” is a euphemism designed to obfuscate the fact that conventional supply & demand theory doesn’t accurately model RE markets. S&D is disingenuously cited to justify builidng more luxury units into a speculative bubble, and it is conveniently forgotten when demand craters.

  4. Grant Street and Columbus Ave. vacancy way up. Locals are pushed out, new tenants don’t work in the city, don’t shop local, don’t go out, they do not add to local commerce, community. we are a bedroom community now, shame.

    1. SF is a bedroom area for what city?

      Think of it this way. SF builds almost no new housing for decades. SF has a ridiculously onerous approval for any planned construction. Retail can only be on certain streets and businesses can only have below a certain number of locations to open. This leads to exorbitant rents as retail space is either limited physically, limited economically, or limited by the rent numbers landlords are trying to recover.

      SF is struggling because we set rules to make sure it struggles.

      1. However, when you look at all of bay area, SF does produce a lot of units. It’s just that given the prices, there’s not enough demand. Take a look at Lumina for example. Arguably one of the largest single projects to be done recently with 655 units. First units went on sale in fall of 2014. Three years later, they are still selling, so they’re at a pace of about 200 units per year. But expensive units are still useful since it allows some to upgrade, releasing the cheaper units into the market.

  5. there are no stores on union street for “regular” people. only boutique shops selling high-end and/or obscure things. that’s not going to generate critical mass pedestrian traffic, especially when it’s kind of separated from the main tourist area. need higher density building and also allow some formula stores in order to be viable.

    1. Union Street has formula retail. Sur La Table and Z Gallerie off the top of my head. Regular people shop there. As for higher density building, adding high rises won’t necessarily generate a need for retail. JWS is correct in that there are restrictions in place that make doing business on Union St. more difficult than in other neighborhoods.

  6. Nobody has mentioned this yet. Union Street has restrictions, significant ones at that, on new restaurants and bars. Chestnut Street, literally minutes away and with the same exact neighborhood demographics, does not have those restrictions and is flourishing with virtually no vacancies on their main drag OR any side streets.

    I wonder what Union would look like if restauranteurs could get their hands on some of those vacant spaces. What would Adriano Paganini be able to do, for example, with the old Osha Thai space?

    Make of that what you will.

  7. I’m going to say that the issue would be landlords raising the rents to levels that the market cannot accommodate. This is probably the reason why every strip in the city is becoming more and more homogenized. Everything is starting to look like union street. If the landlords were more reasonable, then more people and businesses could break into the market and it would allow for a greater variety of establishments.

    1. That is a part of it and one I don’t get. There is a vacant space in Lakeside Village that used to be a nice restaurant. When that restaurant closed the landlord kept the asking rent high. To this day, 8 years later, that space stands empty. Don’t see how that pencils for the landlord. Anecdotally anyway there is a lot of that going on. Other factors are neighborhood groups blocking use of storefronts. There has been an empty tiny storefront on Portola for 10 plus years. Walgreens came into a larger space next door and wanted to expand into the unleashed front but pressure from the neighborhood kept them from doing so. Then CVS came along with a big new store and Walgreens closed as they couldn’t compete. That storefront has been now empty for 5 years and, just recently, the shop on the other side closed so that is 3 empty storefronts on a short stretch of Portola.

      1. Also don’t get how a lnadlord benefits from keeping a space empty for more than a year (and know several spots in SF where similar businesses were evicted and then the spot stayed empty for many years). Don’t they have to pay property taxes on the empty space? Castro, Valencia, Church Street, etc. all have this issue.

      2. You don’t get it ?? Some people are irrational , or just plain dumb…or both. They start out with an overinflated sense of the value of their property, or maybe they rented to a fellow lunkhead who was overpaying – and the fact that it went out-of-business doesn’t leave any impression on them as to why that might have happened – and every month that goes by they say to themselves “well now I have to get even more, ‘cuz of all those months it sat unrented”. Repeat: infinitum.

        1. There are several property owners that likely view their property as more valuable vacant… and some of them bought, say, half a century ago. They are also well-known in their respective neighborhood and have such a tarnished reputation that potential tenants stay far, far away.

        2. Or maybe these owners are wealthy enough that it’s actuall advantageous for them to leave those properties vacant. They probably own other RE assets that provide all the cash flow they need. Sometimes too much cash flow is a negative (pun intended!) I know, it’s counterintuitive, but there are many LL’s in SF that don’t actually need to optimize for cash flow anymore. They have done so well on appreciation and the rent increases they have on other (perhaps easier to manage) properties that they are all set and don’t want the headaches. SF RE- yup, it’s that good.

        3. It’s not irrationality or stupidity at all. By resisting lower rents, LLs are acting entirely in their rational self-interest:

          1. LLs who don’t need the cash flow don’t lower rent, because it will lead to downward pressure on the rest of their properties; it’s better to leave some units vacant while still reaping high rents elsewhere.

          2. Commerical loans are based partly on a building’s value as determined by expected rents. Lowering rent provides concrete evidence that the building is overvalued, and this can trigger unfavorable loan repayments for the LL.

          3. Prop 13, keeping property taxes low, low, low.

          4. Income tax benefits: mortgage interest deductions/ writeoffs for losses on empty units/ building depreciation.

      3. While it may seem irrational with hindsight, it can be rational at the time the decision is made. Some factors to consider:

        – Commercial leases may be for 5 or 10 years, so even a difference between taking and asking of 5k per month could add up to 60k per year or 600k over the life of the lease.
        – Lower rents may put downward pressure on neighboring spaces which are owned by the same landlord
        – Restaurant spaces are business opportunities to invest in the underlying restaurant itself for a percentage of the net receipts. So if the restaurant itself has to pencil out for the landlord. It’s not a just a question of the fixed rent.
        – optimism that a rally is around the corner.

    1. A cynic would argue keeping storefronts vacant is a long term strategic plan to build consensus around a narrative of vacant stores for the goal of easing chain store restrictions

  8. Weirdly, I actually feel Union has slightly improved over the last year or so even with more closures. Right now it’s geared excessively towards the fitness industry with Equinox, Soul Cycle, a Crunch, and an over-saturation of fitness clothiers.

    I mentioned this is in the last thread on this topic, but many of the retail spaces on Union are tiny. Whereas Chestnut has much larger spaces that can house Pottery Barn, the Apple Store, Delarosa, Super Duper, etc… Some of the shuttered former restaurants places are asking for insane rent and that industry is way too competitive here to take a chance on a location that hasn’t proved to be a top dining destination.

    Cow Hollow also has a slightly strange demographic. It was never a trendy area like the Marina or Mission so residents have a tendency to be older and walking there isn’t always easy. It’s pretty much on the side of the hill so at some point you’re going to have to walk up or down.

    My solution would be the same as it was in the previous thread. I’d put a chain drug store maybe where the garage was (please no more banks). A Bi-Rite would fit nicely in the former Nike whatever it was. I also wish Fredricksen’s would open a satellite hardware store on Union proper. The currently location cramped and disorganized; the back patio is a mess, and the registers are frequently broken… I’m sure they have great rent, so I’d hardly suggest moving, but a larger, better organized hardware store could do well. The long shuttered Osha, sadly, is better designed for a yoga or pilates studio, otherwise the Shake Shack would be a good tenant. There are a lot of quirky spaces that are either up a small flight of stairs or underground, which are increasingly unpopular for retail. I’d convert some of those to shared office spaces. I also noticed Starbucks is trying to create a mobile only store next door. Great! Allow more store mergers!

    Niche retail isn’t coming back for the foreseeable future now that we’ve turned Amazon into a verb. Landlords need to stop thinking retail rents are going to rise eternally and respond accordingly, but that isn’t likely, so I’ll continue to post my fantasy Union Street wish list in another 2 years….provided I haven’t run away…

  9. Nobody addressed the elephant in the room: High rents for retail space. Small business can’t survive at those rates.

  10. We live in the Marina, though the only store on Union I go to regularly is Epicurean Trader to pick up a load of overpriced Tartine Bread (11.99 per 10.50 at the bakery). Jest Jewels is a lovely independent store.

    1. Calculate the price of that bread per oz. vs. any other bread – it is actually the same or cheaper price as most breads b/c of how dense it is.

  11. More than half of the stores shown as vacant have signed leases or are in lease negotiations. If any retailer desires a change of use, constructing improvements or other items that mandate permit approvals which are not “over the counter” the process can take six months to a year for PERMITS.

    The main reason for vacant storefronts is NOT amazon is NOT greedy landlords, it’s the ridiculous NIMBYISM and archaic permitting restrictions and processes that one must go thru. Building out a “shell space” for a 2000 sf shop to a new design new fixtures can easily be over $250,000 before you need to work on any mechanical equipment. Restaurants are twice to four times that amount.

    You want activity and less vacancy write supervisor Farrell and the board – Peskin, Kim, Bread, Avalos (think he’s gone thank god) and tell them to loosen Restaurant restrictions and issue more entertainment permits and liquor licenses and you will see no vacancy. You will see, guaranteed, NIMBYS come out in droves to stop this because they will take a vacant boring storefront over noise or god forbid alcohol drinking in their neighborhood.

    Most people have no idea how their choices and lifestyles are impacted by the small minority of NIMBYS who show up to stop anything and everything. There often is no opposition to them in hearings on uses and permits for retailers. The board of supes loves to hear the rally cry of no more no more! You want change – show up, write Farrell. Otherwise the decisions are influenced by people who want no change, no noise and no fun.

    1. Exactomundo! It’s NIMBYs plus SF’s planning and bldg. depts. that make new stores or any changes to fit new uses/new demographics really arduous. Takes a long time and costs lots of money. Which commensurately equals longer vacancies.

      1. Yes!!! it couldn’t possibly be that rents in SF are too high and force small businesses to spend far more than the expected 5-8% of gross sales in rent.that was the historic norm. Nosiree.

        For a few years, a few small businesses in SF were able to shell out more than 30% of gross income in rent, so that is what we, the landlords, shall expect to extract for evermore!

  12. Then you are saying — contrary to official neo-classical economic orthodoxy — that supply doesn’t affect price. Yet you are one of build!build!build! gang who claim that building more luxury lofts will make housing more affordable. You are having it both ways, claiming that increased supply does and doesn’t affect price. Are you confused or just verrry cynical?

    1. A bit aggressive there – Supply and demand works but often with a delay. An over-supply of PDR or retail space will decrease the rents of such space over time. Initially, many property owners will hold out in the hopes of landing a higher paying tenant; one which they can justify to their mortgage lender. But as the space sits empty for long periods of time that becomes a costly proposition and they will usually lower the rent or try to convert the space to other use that pays better i.e. instead of an auto repair shop you get a tech company to move in.

        1. And some people buy lottery tickets in the hope that they will win the jackpot.

          The rules limiting the uses of retail in the area is a way of curbing demand. Some Landlords may be hoping that by holding on to high asking rents they can change the restriction and open up to other uses that. Perhaps they will win the lottery..

        2. “They can afford to sit and wait.”

          In other words, basing economic policy on a theoretical pure supply and demand model is a joke, because no such model exists in the real world.

          1. But this simply factors into the supply curve. They have a price they want, and they will rent it out when they get that price. That is the very definition of supply. Similarly, renters have a price they will pay, and they will rent if they can get that price. That defines the demand. If the supply and demand curves intersect, the price is at that point of intersection. If they do not, you don’t close the transaction. Not complicated.

            But I’m curious. If you don’t think prices for homes, commercial rents, or anything else are determined by supply and demand, how do you think prices are determined?

          2. Righto and nicely explained ^anon^, which is exactly why rents are stickier in more upscale locations; the LL’s are wealthy enough to leave vacancies for longer. Renting out is more a choice, more of a ‘nice to have’ if you will. Less established LL’s in more up and coming locations can’t afford to f-around, and need to rent their properties out faster. And this largely also applies to SFH homes as well as resale condos. i.e. more owners can afford to wait out a lackluster sales season. Which is why SF sales tend to decline a lot less than boom-bust markets like Arizona, Florida, etc. And I also think nouveau riche markets like Seattle are more susceptible to price declines, as most of their property owners are less established than their SF counterparts. Wealth begets wealth. That’s a discerning value of blue chip markets vs lesser markets.

Leave a Reply

Your email address will not be published. Required fields are marked *