[BTinSF]

Friday, April 17, 2009
Recession slows arrival of shopping, eating venues
San Francisco Business Times - by Sarah Duxbury

Any bona-fide neighborhood needs a place to shop and eat.

For Mission Bay, that’s going to be Fourth Street. But before it becomes the south-of-channel cousin to Noe Valley’s 24th Street or Chestnut Street in the Marina, buildings must be built, offices and apartments filled, and those retail leases signed.

And that means that Fourth Street’s retail rollout will be more than fashionably late. The recession has without question slowed Fourth Street’s rise, but those most bullish on the neighborhood, and most versed in its vision, are nevertheless sure that it will look good once it arrives.

The San Francisco Redevelopment Agency and developers have worked hand in hand almost from the get-go to ensure that Fourth Street is fit for retail activity.

Strict limits — interior depths of at least 40 feet, maximum street frontages of 75 feet, high ceilings and stepped-back towers that allow light to reach the street — govern the ground floor architecture. Most spaces will max out at 3,000 square feet. Cosmetically, the sidewalks are generous and benches will provide shoppers resting spots. Metered parking will line both sides of the street, which some day will have between 80,000 and 100,000 square feet of retail.

“The vision of Fourth Street retail is neighborhood, independent owner-operators, goods and services spilling into the street,” said Erika Elliott, a broker with Cornish & Carey retail who is familiar with the Fourth Street vision. “It’s just like every other San Francisco neighborhood, except we have to build it.”

So far, only Urban Housing Group’s Strata is complete.

Retailer interest in the Strata’s 10,000 square feet has been muted, in part because retailers have been hard hit by the recession, and also because many wanted to see not only the building open, but the street itself.

“We knew going into the development that the built-out environment would need to be more in place to attract retail, and that’s what we’ve found,” said Dan Deibel, vice president of development for Urban Housing Group. “Our goal is to lease the retail over the next 12 months.” He hopes to have the restaurant space signed within six months.

Nor will Strata stand solo for long.

Mercy Housing’s building on Block 13 is under construction — it also will have up to 10,000 square feet of retail. UCSF’s housing building on Block 5 is likely the next to rise.

“It’s challenging. If the economy were better, there would be more buildings being built now and it would be easier for retailers,” said Amy Neches, project manager for Mission Bay. “One building is not a market. It’s tough out there.”

The other key to Fourth Street retail is that it will be strictly local. Chain stores are not welcome.

“We spend a lot of time with our developers talking about Fourth Street and talking about retail and talking about the vision and the importance of getting that mix that helps make this a really great place,” Neches said. “I jokingly tell them that nobody’s going to move to Mission Bay to be near a Jamba Juice. What makes people want to live here is this cool stuff going on at ground level. … They need to really buy into this as an amenity to sell their residential units.”

Among the kinds of shops planners see there are plenty of food outlets and everything else a neighborhood needs, from a dry cleaner to a drug store to a shoe repair. A wine shop or cheese shop would be nice, and so would a hardware store. Because the visionaries someday see young families in Mission Bay, some family-oriented retail is probable.

That the whole neighborhood is master planned makes it easier to engineer the “right” tenant mix.

“We don’t want to do what we had to do on King Street just to get it leased 10 years ago,” Elliott said of the national chains like Quizno’s that have set up shop just north of the channel.

The vision is therefore long, and planners simply hope that the landlords are as patient.

So far, they seem to be.

Today, the daytime population of Mission Bay is about 8,000, Elliott estimated. It will grow as Alexandria Real Estate Equities builds and fills buildings, and will grow again when the Radiance does its next phase, and it will keep growing for years to come.

As it grows, so too will retailer confidence and interest in Fourth Street. The “right” leases are hopefully not far behind.

sduxbury@bizjournals.com / (415) 288-4963

Source: http://sanfrancisco.bizjournals.com/...20/focus3.html