Twitter moved into Mid-Market last week, after helping trigger more new investment in the area than in the prior half century. Investors have responded to a combination of the Mid-Market / Tenderloin payroll tax exemption and Mayor Ed Lee’s convincing businesses from Yammer to Benchmark to the American Conservatory Theater that he was steadfastly committed to Mid-Market’s revival. Yet even before Twitter occupied its new Market Hall home, or renovations/construction at ACT, the Renoir Hotel, City Place and other sites have begun, two curious narratives have emerged. First, it is said that Mid-Market’s resurgence has raised residential rents in San Francisco, despite no evidence of this impact. Second, some argue that the revitalization is all hype, since “Market Street has the same problems as before.” This assumes that improvements in Mid-Market could somehow precede new occupancies and developments. The fact is that Mid-Market is on an irrevocable course of revival, but the area cannot be transformed overnight.
If Mayor Lee had announced when he took office in January 2011 that by 2012 the Mid-Market area would attract high-tech companies and ACT, the bankrupt City Place retail complex would move forward, the long-vacant Golden Gate Theater office building at 25 Taylor Street and the Warfield Theater office building would be purchased and occupied, and the Renoir Hotel would undergo a $40 million makeover, nearly all San Franciscans would have thought the new interim mayor had lost his mind. Yet all this and more has occurred in a blizzard of economic activity as unexpected as anything in the city’s recent history.
But skeptics remain. And they make up two distinct camps.
Mid-Market No Factor in Rising Rents
The media is always on the lookout for the “dark side” of good news. In the case of Mid-Market’s revival, the focus is on how the area’s resurgence as a bastion of high-tech jobs is causing rising rents and economic dislocation for poor and working-class people in San Francisco.
A very thoughtful June 4 New York Times story (“New San Francisco Tech Boom Brings Jobs But Also Worries”) captured this concern, but provided no evidence linking rising rents to Mid-Market’s future revival. Rents rose in San Francisco when high-tech firms incubated here and then left for the South Bay, and would be rising just as much if Twitter and the other tech companies moving to Mid-Market had stayed in their current locations.
San Francisco is a city whose top law firms routinely pay starting associates over $125,000 annually, and where physicians at UCSF and other hospitals earn much more. And many in the city’s vast financial services sector earn salaries that greatly outpace attorneys and doctors. As the city’s high-income residents chase a relatively fixed supply of apartments (little new was built from 2009-2011), steep rent increases followed.
These increases had nothing to do with Mid-Market.
There is little housing on Mid-Market, with Trinity Plaza and Fox Plaza the largest housing sites. The new Trinity Plaza’s rents on vacant units were dramatically higher than originally projected when it opened in January 2010, which was well before Twitter announced its potential move.
Will Mid-Market’s revival cause higher rents than would otherwise occur on newly built units in the area? Absolutely. But most of these projects would not have been built absent confidence in Mid-Market’s turnaround, and these units are likely to house many of the area’s new workers.
“Market Street Looks the Same”
The more common skepticism about Mid-Market relies on an irrefutable fact: much of the area looks little changed since Twitter announced its plans. This leads some to claim that Mid-Market’s revival is all hype, and is as problem-filled as ever.
While street ambassadors have been added to Market, and there are food carts and music events in UN Plaza, the worst parts of Mid-Market have not noticeably improved over the past year. But today’s looks are deceiving.
The City Place shopping center between Fifth and Sixth Street’s would have been under construction last year, had its lender not gone bankrupt. The project’s recent sale and revival means construction will begin in early 2013, with the same anchor tenant – J.C. Penney’s – that was originally slated for the project.
ACT’s project at the former Strand Theater site will not even be approved until at least 2013, also creating the false impression that nothing is happening at the site. The same is true for the proposed “adventure travel” project set for the now boarded up Grant Building at 7th and Market. 973 Market (the beautiful building with the scaffold in front of it across the street from the Warfield) has been vacant and tied up for years in litigation, but is now moving forward on completing its renovation.
Pop-ups at the Renoir Hotel are still opening, and the Kor group’s multi-million dollar renovation of the hotel has yet to commence. Similarly, WeWork’s recent purchase of the long vacant 25 Taylor office building next to the Golden Gate Theater has yet to be accompanied by visible signs of soon to come renovations.
Today, 50 UN Plaza is vacant. In 2012, 1,300 workers will be moving into the historic federal building, changing the plaza’s dynamics.
It’s easy to demark progress at Crescent Heights project at 10th and Market, because there is ongoing construction. But it will not be until Market Hall’s retail spaces are active that people will see the full impact of Twitter’s relocation to the building.
Progress Just Around the Corner
By this time in 2013, Mid-Market’s progress will be apparent. By the presidential election of 2016, City Place will be completed, ACT’s new theater will either be open or under construction, the new Trinity Plaza building on Market will be underway, and all of the pending projects in Mid-Market should be done.
Nobody claimed that a Mid-Market neighborhood in decline since the 1950’s could become an economically thriving area overnight. But its transformation is both inevitable and remarkable, confirming the faith of its longtime supporters.
