The displaced businesses - Page 2

There's a downside to the real-estate boom on Market Street

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Grant's Tobacconists, established in 1849, lost its lease amid rising commercial rents.
GUARDIAN PHOTO BY ANNA STERLING

"The landlord came to us about three months before our lease was up and said, 'We're going to raise the rent on this entire floor. We're going to take everybody out of here and we're going to put a high tech company in here because we can get 2-3 times the rent.' They were very blunt about it," Selby said.

"The city talks about the revitalization of mid-Market and it's still pretty dismal out there. But the rents are going through the roof. They think we're going to have a great high tech company and they're going to give us 5,000 jobs, so they bend over backwards for these companies and ultimately end up screwing the small businesses that are here in the boom and in the bust."

Now an entire floor of small locally owned businesses is looking for office space — and some may be lost to the city altogether. Selby said she and others are looking east, towards Oakland.

 

HUGE SPECULATION

It's the same story up and down the city's major artery as San Francisco faces what John Kilroy, the head of the giant Kilroy Realty Co., told investors recently is the hottest commercial real estate market ever. J.K. Dineen, the Business Times reporter who covers real estate, quoted Kilroy saying, "I've never seen so much visible demand."

Chris Daly, a former San Francisco supervisor who recently shut down his bar, Buck Tavern, at 1655 Market, said the increasing rents made it impossible for him to stay in business.

"In discussions about the new lease for space, the property manager did mention mid-Market revitalization as a reason why the building owner was holding out for what she was holding out for," he told us. "Clearly in the last year, there's been huge speculation on commercial property. There's vacant spaces with asking prices that are pretty ridiculous."

He explained that the neighborhood is no longer friendly to an inexpensive operation: "I wanted to have a community-oriented type of place with reasonable prices. Unfortunately, the rent that was being asked would not allow that kind of format to work."

San Francisco Scooter Centre is on the ground floor of a boxy, three story, red-brick building on 10th Street, two blocks south of Market. Owner Barry Gwin says his business has been booming since the recession hit because scooters are a cost-effective alternative to driving when gas prices increase. Over the eight years, he's been at his current location he's seen other businesses on the block leave and, despite his success, he knows his time will come.

"It sucks," he says. "I know I won't be here in four years."

Others aren't as optimistic. Around the corner is a small nonprofit where an employee says she read in a local paper that her landlord sold her building to a developer who plans to build a hotel. After five years at the same address, her organization is going to have to find somewhere else to go.

In the second quarter of 2012, mid-Market's vacancy rate was above 29 percent — high if you consider the Financial District's vacancy rate is sub 10 percent. But as the end of the year approaches, that vacancy rate has fallen seven points.

John Bozeman of the Building Owners and Managers Association (BOMA) of San Francisco sees the neighborhood's appeal. "If I was trying to lease commercial space, I'd say it was attractive because it's near SoMa which is at capacity or near it," said Bozeman. "If you look at the Twitter headquarters, that's probably the biggest footmark on Market and tech survives around like-minded people."

Comments

I was regular customer of Grants for years. I finally stopped patronizing them when I witnessed one of the owners verbally abuse a friend of mine. No business can survive when you send your regulars packing.

Posted by Guest on Nov. 07, 2012 @ 8:02 pm

The previous commenter is correct. I had been a regular customer for several years and finally stopped patronizing them. The abusive behavior by one of the owners just got too much to deal with.

Posted by Guest on Nov. 07, 2012 @ 8:07 pm

Really. The premise of this article seems to be that Lee's Twitter deal and similar policies are going to drive out small businesses. It then holds up this small Tobacco store up as an example. The twitter deal was done to revitalize Mid-Market- i.e. 6th and Market. This store was way down on 2nd and Market. A very different area. 2nd and Market is right next to the financial district. I think the likeliehood that the hoped for revitalization of Mid-Market is hardly to blame for this small store going down, sad as it is. Same goes for the bike store- frankly seems like a horrible location- a family friendly bike store on Market near the financial district? eeek. Not a lot of kids down there.

Frankly, I would like to know the SFBG's big blame for mid-market? The opposition to the twitter deal etc. is apparent, so if not twitter- then what- the status quo of drug deals, sleazy hotels and drunks- what would the SFBG do to fix up Mid-Market?

Posted by D. Native on Nov. 08, 2012 @ 6:09 am

First, Second and Market is nowhere near the Mid-Market area. That intersection is right in the heart of downtown, which has always been a high-rent district.

Second, a story about an old tobacco store moving is (a) not representative of all small businesses on Market Street, and (b) at the very best, anecdotal evidence of small busineses being affected by rising rents on Market Street,

Third, is a tobacco store really the highest and best use of a retail space on market Street?

Fourth, why not move the store to a cheaper location? Apparently, Grant's has been around for 160-years, but it only has been at 2nd and Market since 1963. I guess it changed locations several times over the years, and it could do it again.

Sorry, but perhaps it is simply time for Grant's to move on, or even go out-of-business. How many people really need a tobacco store anymore? Even among smokers, very few I suspect.

Posted by Chris on Nov. 09, 2012 @ 2:16 pm

I was amused by the name of the bike store... and wrongly surmised it was intended to be a bit of humor based on a Spoonerism.

Posted by lillipublicans on Nov. 11, 2012 @ 11:34 am

Stores have come and gone, taste changes, styles change, small businesses owners face all sorts of hurdles, changing customer trends. What about all the other small businesses that were push out before the Dot.com 1 and 2, That nice place you might eat at, or the coffee shop you go to might have displaced or caused someone to go out of business due to the increase in rents.

Posted by Garrett on Nov. 14, 2012 @ 11:10 am

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