Castro from atop Twin Peaks
This past Wednesday, the Eureka Valley Neighborhood association hosted a discussion panel titled "Facts Regarding Formula Retail" where local merchants associations, neighborhood associations, commercial real estate interests, and a member of the SF Planning Department came together to engage the public on the future of formula retail in the neighborhood. The SF Planning Commission is currently undergoing a citywide study of the issue headed by AnMarie Rodgers with city supervisors pushing plans to expand a city-wide policy on formula retail.
Alan Beach-Nelson, EVNA President, was optimistic about the conclusions drawn during the discussion saying, "I think that our panel discussion was quite successful despite the fact that there is very little hard data and research on the topic. This is and will be an on-going conversation, and once the Planning Department completes their study, we should have another, co-sponsored, panel discussion on the results of the study, and the implications for our neighborhood specifically, and citywide."
Beach-Nelson provided the Castro Biscuit with his notes of the meeting. Many of the discussions regarding the nuanced nature of defining formula retail and its true impact on local businesses, the neighborhood, and lease-rates concluded that more hard data and study is required. The hope is that the SF Planning Department's city-wide study will provide some of these answers.
Some highlights:
Ground floor formula retail in the Castro/Upper Market corridor consists of 28% formula retail, 31 out of 110 businesses, and looking at the four major intersections, 34% is formula retail, 19 out 56 total establishments. (Source DTNA formula retail study.)
That 20% would be the cap for formula retail concentration along Upper Market was based mostly on an educated guess, and was set as a test.
As of June 2013 the vacancy rate in the Castro/Upper Market commercial zones is 6.9% (does not include upcoming businesses SFAF, CVS, Eureka!, etc.)
While the Castro/Upper Market vacancy rate would put us in the top 10 of all markets nationally, according to a Llenrock study of Colliers Commercial Real Estate data, our commercial corridor's overall vacancy rate is nearly twice that of the City's overall 3.8% rate. One panelist has noted after the discussion, that the high vacancy rate does not reflect lack of interest but is indicative of a complex entitlement process vis-à-vis formula retail, size and use restrictions, and, in some cases, very quirky property owners.
EVNA, Duboce Triangle Neighborhood Association, Merchants of Upper Market and Castro and the Castro Community Benefit District, funded in part through Supervisor Wiener's office and the CBD are in the early stages of a "Leakage Study," i.e., what types of services are not available in our neighborhood that cause people to go elsewhere to shop, which will help us to better understand this very issue.
Over 30,000 square feet of added retail space is coming online over the next two years along Market, an estimated 17 spaces averaging 1,700 square feet each. The urgency of needing a clear idea and plan of what we as a community want in our neighborhood so as to proactively address the added capacity is clear.
The Commercial Retail Brokers provided an after panel data point on the costs of space: "the new retail space available in mid-Market and upper-Market is, for the most part in the $42 to $45 per sq. ft. per year range, i.e. $3.50 to $3.75 per sq. ft. per month. In addition, the taxes, insurance and common area maintenance on these spaces generally range from $6 to $10 per sq. ft. per year or from 50 cents to 85 cents per sq. ft. per month"
Highlights taken from EVNA notes on "Facts Regarding Formula Retail" discussion (PDF).
The next step in this process of determining the future of retail in the 'hood and how to address the forthcoming abundance of retail space will likely be waiting for the SF Planning Department's findings followed by another community-wide discussion as suggested by EVNA President Beach-Nelson.
We'll keep you in the loop!
