Overcoming Mid-Market’s Owner-Caused Blight

by Randy Shaw on March 8, 2012

San Francisco’s long troubled Mid-Market area has made such tremendous strides in the past year that only the stretch between 5th and 7th Streets and UN Plaza remain a concern. The Plaza will improve from the eventual re-occupancy of the federal office building at 50 UN Plaza and accompanying outreach services, and the markets and food trucks are already making a difference. But Market from 5th to 7th Streets is a bigger challenge, with the chief culprit owner-caused blight. Such blight include the long vacant buildings on the south side of Market between 5th and 6th streets caused by failed investments on the former City Place site going back to the late 1990’s; properties across the street are vacant for the same reason. The historic Grant Building at 7th and Market was fully occupied by nonprofits and small businesses a decade ago, but now sits boarded-up while its current owner seeks to transform it into a youth hostel. Overcoming this owner-caused blight poses a challenge, but it can be done.

Since the city enacted a payroll tax exemption for Mid-Market, the area between 8th and Van Ness has boomed. The area is moving from forlorn to exciting at a remarkable pace, anchored by one of the most ambitious renovations of an historic building in the history of the United States at the former SF Furniture Mart at 9th and Market.

There is also good news east of 8th Street with ACT’s recent purchase of the long-vacant Strand Theater site. ACT’s proposed 300-seat venue is a major breakthrough for the area, and solidifies the block anchored at 8th by the new Trinity Plaza.

And while not on Market, the long-vacant Hibernia Bank building at Jones and McAllister appears to be finally moving toward undergoing the seismic upgrade that has been talked about for nearly two decades but never done. Once completed, occupancy should not be far off.

Owner-Caused Blight

The biggest challenges on the still-troubled stretch of Market between 5th and 7th Streets all involve sites victimized by either failed or questionable investments.

Developer David Rhoades and his Urban Realty colleagues did everything right for City Place and I remain convinced the project would have been a great success. And Rhoades deserves credit for having the vision to acquire properties on the other side of the street as well.

But once Urban Realty lost financing, this left two giant parcels at 935-965 Market between 5th and 6th Streets in limbo. The City Place site was approved for condominiums in the 1990’s that were never built, which means that its multiple buildings have sat vacant for over fifteen years (City Place added the former Social Security building to the original condo site).

Across from the Warfield Building is a beautiful historic office building that an investor decided some years ago to convert to condominiums. But he ran into problems, lost financing, and the building has sat vacant with a sidewalk scaffold for years. With office space now scarce, this would be a great site for a high-tech or other firm to occupy the entire building – had the prior investor not torn up the interior and begun the conversion to housing.

The former Hollywood Billiards site on the north side of Market has also been long vacant due to its owners hope for a major development on the land. But these plans did not materialize and it’s well past time for new commercial tenants to be brought to that long boarded up space.

Whereas other owners tried their best to transform vacant sites into positive uses, the owner of the historic Grant Building at 1095 Market took a long occupied office building and first vacated it and then boarded it up. Simon Johnson’s plans to spend $15 million to convert the building into a youth hostel / adventure travel site never made sense, and the project has moved at a snail’s pace.

When Johnson announced his plans, nobody foresaw that Market Street’s rejuvenation was just around the corner. People I spoke with at the time felt he deserved credit for investing in the community. But all Johnson has achieved to date is a public eyesore on 7th and Market, also eliminating not only office tenants but also the ground floor commercial spaces that brought additional vibrancy to the area.

An Action Plan

The city’s various Market Street planning groups need to take a serious look at securing public, private and foundation dollars to recruit “pop up” stores and galleries for the two former Urban Realty sites between 5th and 6th Streets. These sites are in “limbo” while still owned by the Texas-based Lone Star hedge fund, but they will eventually be sold and the city cannot allow these sites to sit in their current state while the new owners spend years creating new plans.

Unfortunately, real estate experts tell me that there is no chance that a new buyer would proceed with City Place as approved (or slightly modified). The closest the city is likely to get to the approved four-story, 250,000 square foot retail complex is a major ground-floor retailer and perhaps one additional retail floor.

That means a completely new project. And a minimum of two to three years where the property either generates activity through pop-ups, or sits idle. I think any new owner hoping to develop the site would embrace the pop ups as a good faith gesture to the city.

With ACT buying the Strand site, plans for the Urban Realty “triangle” site on the north side of Market and bordering Turk Street are entirely up in the air. This makes interim uses imperative, particularly on the troubled south side of the first block of lower Turk.

Getting pop ups on this lower Turk portion will be a challenge, but something must be done to activate that street, which is adjacent to the Warfield and Golden Gate theaters.

At a minimum, the city can fund the installation of art projects, which at least improves the currently depressing visual of a long strip of boarded up and vacant buildings along Turk.

I do not know the construction schedule for the Grant Building conversion, but it work is more than a year away, art or pop ups should be installed on the ground floor in the interval. The Renoir Hotel across the street may soon undergo a major renovation, so Market Street faces the prospect of its two pillar buildings on 7th both being closed at the same time.

None of this will slow the transformation of Market around 9th and 10th into a dynamic and happening public space that will change the look of the entire area. But having achieved so much so fast on Market west of 8th Street, it would be great to see progress particularly between 5th and 6th – despite the obvious challenges.

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