Major San Francisco street now inviting chain stores to occupy vacant spaces

SAN FRANCISCO (KGO) -- Van Ness Avenue was once San Francisco's auto row. Rambler, Dodge, Cadillac, Buick all had a stake in the city.

The majority are now gone leaving behind large empty commercial spaces.

"We're at 35% vacancy. We're at 250,000 square feet of vacancy," outlined Cameron Baird, senior VP of Avison Young.

That's more than four football fields put together.

"Eight of the sites are over 10,000 feet," added Baird.

In other words, small businesses have no business leasing these spaces.

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"So, it leaves a whole in leasing so who is attracted to these spaces, usually large national tenants and what they have told us is that they're not interested in coming here anymore, they don't want to go through the fight," said Baird.

That fight has gone on for years because for the most part San Francisco has protected small businesses by blocking some retail chain stores from leasing space.

That will no longer be the case in parts of Van Ness Avenue as the long and costly special permitting process for chain stores will be eliminated.

"Along Van Ness, along a highway, a busy street, these are the spaces that formula retail should be in and we want to make it easier for them to open up," said Supervisor Danny Sauter, who represents part of the Van Ness Corridor.

Three neighborhoods in San Francisco, North Beach, Hayes Valley, and Chinatown have banned chain stores for more than 20 years and have already launched a preemptive strike.

"The North Beach and Chinatown Business Associations wrote a letter to the Board of Supervisors and the mayor that says, we don't have a problem with this Van Ness loosening of controls and regulations but don't think that you should or can do that to Chinatown and North Beach," warned former San Francisco Supervisor Aaron Peskin.

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But others see the changes to the Van Ness corridor as an opportunity to begin lifting some business restrictions in other parts of the city.

"We are getting serious about supporting small businesses in our city by removing outdated rules and slashing unnecessary regulations," promised Sauter at a recent SF Supervisors meeting.

For example, in most of district three which Supervisor Sauter represents, two businesses are not allowed to operate in one location.

"If you want to open a coffee shop and a book store under one roof, you're not allowed to do it in our district, that's something we're going to change. It makes no sense. We need to give businesses more flexibility," explained Sauter,

Retail experts say that kind of flexibility is vital to the city's economic recovery.

Because so much focus in on the downtown area, many don't realize that other areas are struggling like Telegraph Hill where leasing has become nearly impossible because this area is primarily office space.

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There are cafes here that seem frozen in time since the beginning of the pandemic. On May 16, this Starbucks within the Levi's Plaza complex closed. Two weeks later, so did Fog City Diner after 40 years.

"But some of these closures are natural and it's going to be opportunities for new businesses to come in and bring in new concepts. We see that office tenants are looking at projects that their employees will want to return to," said Alex Sagues, senior VP of Retail Leasing at CBRE.

Commercial real estate agents are beginning to use the terms "expansion phase," and "rebounding."

Sauter told ABC7 News that two AI-related companies had recently leased two spaces -- a total of 43,000 square feet -- at Levi's Plaza and Waterfront Plaza.

This area could turn out to be a "real" hub for "Artificial" Intelligence startups.