The malling of San Francisco - Page 3

National chain stores are flooding into a city that once led the nation in protecting neighborhood businesses and setting limits on commercial spaces

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The Metreon mall is being revived by a huge Target scheduled to open this fall. Will it put the city in chains?
GUARDIAN ILLUSTRATION BY DANNY HELLMAN

It isn't that these cities are actively courting the national chains in most cases. It's just that in the absence of strong local controls, developers and large commercial landlords just prefer to deal with chains, for a variety of reasons.

"If you're just going with the flow of what developers are doing," she said, "you always end up with national chains."

And that's what San Francisco has started to do.

 

 

MALLS LIKE CHAINS

Stephen Cornell, the owner of Brownie's Hardware and a board member of the nonprofit advocacy group Small Business California, said chains have a huge competitive advantage over local businesses even before either one opens their doors.

"In general, landlords tend to like chains more," said Cornell, whose business has struggled against Lowe's and other corporate competitors. "The landlord always worries: is this guy going to make it and do they have the funds to back it up?"

Big corporate chains have lawyers and accountants on staff, and professional systems established for everything from buying goods to opening new stores, whereas most local entrepreneurs are essentially figuring things out as they go along.

"They're very good at selling themselves," Cornell said. "They're going to manipulate the system perfectly, whether it's the city and its codes or dealing with neighborhood merchants."

And for large malls, Cornell said the problem is even worse. Brokers that fill malls have standing relationships with the national chains — most of which are publicly traded corporations seeking to constantly expand and gain market share — and no incentive to seek out or take a chance on local entrepreneurs.

"Chains have a lot of advantages," Cornell said.

Mitchell said there are two main ways in which malls favor national chains over local businesses. In addition to the relationship between mall brokers and national chains, malls are often built with financing from financial institutions that require certain repayment guarantees.

"What they want to see are credit-worthy clients signed onto those places, and that means national chains with a credit rating from Standard & Poors," Mitchell said, noting how that "automatically locks out" most local businesses.

Cornell also noted that national chains have already figured out how to maximize their efficiency, which keeps their costs down even though that often comes in the form of fewer employees with lower pay — and less reliance on local suppliers, accountants, attorneys, and other professionals — which ends up hurting the local economy. In fact, big chains suck money out of the city and back to corporate headquarters.

"All those people are making money and spending money here, so you have to look at the full circle," Cornell said.

Mitchell said there are often simple solutions to the problem. For example, she said that city officials in Austin, Texas recently required the developer of a large shopping mall to set aside a certain percentage of the units for locally owned businesses.

So rather than hiring a national broker to find tenants, the developer hired a local broker to contact successful independent businesses in the area who might be interested in expanding, and the project ended up greatly exceeding the city's minimum requirements.

Mechanisms like that, or like the formula retail controls pioneered in San Francisco, give her some hope. But she said, "Whether the counter-trends will be enough to counter the dominant trend, I don't know."

 

 

Comments

No, its because they are too lazy to travel, and too afraid to do anything but shi* in their own backyards

Posted by Greg on Jul. 12, 2012 @ 10:18 am

What's the big deal if a Target and so forth open up... Where do folks shop there, because no small business has the range or prices of these stores.

Why should the rest of us be forced to put up and shop at these stores? In reality, there is room for both and of course, there are things large stores do better. Costco allows me to purchase organic food, for example, at 1/3 the cost of a small store.

Also ironic to see an area that heavily exploits outsourcing and cheaper migrants over Americans in the IT sector, to rant about protecting the little guy. Not to mention, I am sure no one in the bay area shops online either of course.

Posted by Guest on Jul. 13, 2012 @ 9:50 am

Denying consumer choices to others is a far bigger problem.

Posted by Guest on Jul. 13, 2012 @ 10:34 am

Go rent the movie "The High Cost of Low Prices"

Posted by Guest on Jul. 13, 2012 @ 5:31 pm

The witchunt vilification of "chain stores" (11 stores nationally... WTF?) and anything made outside 15 miles of SF is misguided policy by progressive supervisors (past and present) based on half truths, opinion, guesswork and so called "neighborhood input" (NIMBYS) that has hurt the city and it's neighborhoods more than helped them. SF already has one of the most difficult approval processes for retail businesses in the country, but it's not enough. clowns like Supervisor MAarr favor total ban on specific uses of certain categories of retail and protecting certain categories. After the happy meal ban pet stores and chains are next. Ever been to the Richmond lately? Highest retail vacancy in the city. Mr. jones thinks it's horrible that JC Penney is coming to mid market where it's better to have piss stained, graffitid, vacant storefronts with crack dealers and porn stores than national chains in his mind. He feels awkward in a Safeway i guess. What did you want the metreon to bcome? A urban garden, lasertag, art gallery, homeless shelter? It was built as a retail project you moron. Other businesses follow target and JCPenneys in and around these projects and oftentimes are local retailers and restaurants. Go to the metreon, you can see for yourself if you could bear the site. The transbay terminal "god forbid" might have retail stores. Really? It's a terminal for god sakes. Target is taking over two spaces that were previous large box stores. Guess we should just let spaces sit vacant and wait for 120000 square foot local yarn store. There was an I magnin dept store here 50 years ago you know...... Why does nobody ever talk about the other jobs created (other than employees) for people when a company opens up a business. Much goes on in the background that employs many people but progressives would never mention or bear the thought of mentioning this just focus on the evil corporation and their fleecing of the stupid masses that go there The professionals referenced in the article prefer a "dynamic" view of neighborhoods. How do you pay for these ideal park, open space, car free, neighborhoods if you could? Tax dollars. Where does most of city revenue come from? sales tax. Especially RETAIL sales tax. Theatres and grocery stores and gyms and drugbstores don't open due to useless red tape and small businesses opportunities to open. I'm just a sheep brainwashed by chain stores I guess.

Posted by Guest on Jul. 13, 2012 @ 10:37 pm

Every time I go to San Francisco is a real treat for me, I can find there whatever goes through my mind and it's a beautiful city as well. I hope I'll get back there soon, I am planning some business trips there.

Posted by san francisco burrito on Sep. 13, 2012 @ 1:07 pm

In the absence of government intervention in land use, through height and minimum setback restrictions, segregation of residential, commercial and institutional use of land, impact fees being too low for low-density land use and too high for infill, and property taxes based on the combination of land and building rather than the value of the land alone, big business would not be economically competitive, as the chains require greater amount of transportation infrastructure (both consumers travelling by car and suppliers travelling by truck) and would be paying much more in property taxes per square foot of land.

Posted by Danny Handelman on Jul. 15, 2012 @ 12:20 pm

Anyhting that constrains business imposes a cost to business, which translates to lower wages and higher prices.

Government costs you far more than just the taxes you pay. It's a frictional impediment to all economic activity, and mostly for stuff you don't want or need.

Posted by Guest on Jul. 15, 2012 @ 1:29 pm

Some consumers do love the malls exactly because of their national chain stores and restaurants. This could be due to the familiarity of the brand names and due to the consumers being already accustomed to patronizing those places which are considered common. Well, it is also true though that the authenticity of a place will be diminished or fully eliminated but as time goes by and as economic progression takes over, some things are simply too inevitable not to occur.

Posted by Jeanette Hayworth on Oct. 24, 2012 @ 1:43 am

Just wear one of these beauties to a party and see the attention you will be receiving. You do not have to approach any women.

Posted by aisin on Apr. 17, 2013 @ 8:05 pm