Third Time May be the Charm on Mid-Market
Feb 09, 2012
In 1966 my elementary school class was taken on a field trip to downtown San
Francisco to see the planned renovation of the new Moscone Center and mid-Market
Street. Back then, the area from Second Street to Sixth Street housed old
sailor's hotels and cheap bars and was to be demolished in favor of the new
convention center and new office and residential mid-rise development. It would
take almost twenty years for this project to begin after being held up by
lawsuits and politics.
When the development plan was finally approved,
Sixth Street was dropped off the list and became what is it today because of it.
Back in 1966, mid-Market Street was beginning to see its decline; partly do to
an exodus of families to the new suburbs, partly because of the development of
the shopping center. One by one famous San Francisco stores started to close.
First to go was Weinstein's Department Store on Seventh & Market, then JC
Penny's on Fifth & Market. After that, movie theatres such as The Warfield,
Paramount and the Fox Theatre all closed their doors. It did not take long for
mid-Market Street to become what it is today: a series of vacant stores and
cheap retailers with a heavy dose of drug addicts and criminals walking the
There have been several attempts to revive Mid-Market; the first
came in the early 1980's. Vacancy in office space had been reduced to fewer than
five percent and speculators believed that mid-Market Street offered an
attractive alternative to high-rise office rental rents. Many older buildings
were upgraded to office space only to arrive on the market when it crashed after
the 1989 earthquake.
The next revival attempt came about during the
dot-com boom of the late 1990's. Again, with office vacancy rates hitting under
two percent and rental rates soaring to close to $100 a foot, mid-Market
office space was looked upon by developers as a natural choice for the next
growth sector in San Francisco. When the dot-com bust occurred in 2001,
mid-Market returned to its slum status.
Today many developers are again
looking at mid-Market Street as vacancy rates are dropping and rental rates are
increasing. The relocation of Twitter headquarters to Eighth and Market has
received a tremendous amount of attention and has been used as a springboard by
city officials and developers as incentive for tech tenants to consider moving
to the area. Visually and practically this choice makes sense; it offers cheaper
space, excellent mass transportation and parking options. All of this is
possible in older buildings that could be converted into desirable high-ceiling
brick tech space. The issue is whether or not it will actually happen and if it
will withstand the next downturn, which will happen.
The difference this
time is that the city is making an attempt to change Sixth Street by promoting
and bringing in new business that will support tech firms, not drug addicts.
Today, trendy new restaurants such as Pearl's, Show Dogs and Dottie's have
opened up new locations in the area. New nightclubs are opening nearby and
attracting a more welcome type of nighttime crowd. The police have opened a
kiosk on Sixth Street to help deter crime. More importantly, the police are
enforcing as a crime the sale of food stamps at half price by local merchants in
exchange for drug money.
With new services to attract tech companies,
high-end retailers and restaurants to the area, San Francisco residents now have
hope that these additions will bring mid-Market Street back to its glory days.
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Written by: Hans Hansson
Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 27 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email firstname.lastname@example.org or call him at (415) 765-6897. You may also check out his website, http://www.commercialspacefinder.com/.