Funds sought to implement Castro retail strategy

  • by Matthew S. Bajko
  • Wednesday February 24, 2016
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Seven months after the release of a plan to fill vacant storefronts in the city's gay Castro district, a neighborhood group is seeking funds to implement it.

The Castro/Upper Market Community Benefit District, which joined with a number of groups in the gayborhood to publish the Castro Retail Strategy last June, is awaiting word on if its grant application with the city will be approved.

In January the CBD applied for $25,000 from the mayor's Office of Economic and Workforce Development. Should it receive the funds, the CBD would like to hold a series of meetings with brokers and property owners near the Church and Market Street intersection to begin developing a vision for that part of the neighborhood's commercial corridor.

The nexus there has several storefronts that have been vacant for some time and will see additional retail spaces be built as part of the redevelopment of the former Home restaurant site at the corner with 14th Street.

Andrea Aiello is the executive director of the Castro/Upper Market Community Benefit District. Photo: Jane Philomen Cleland

"We want to get both brokers and property owners really motivated to get those spaces filled," said CBD Executive Director Andrea Aiello. "We need an anchor to draw people to the Church and Market intersection."

There is also a desire on the CBD's part to show that the more than $87,000 spent to develop the retail plan wasn't for naught.

"I have been reading comments in social media about it is collecting dust and a waste of money," said Aiello. "We have been held back because we are looking for additional funding to implement the recommendations. I don't think it will take a lot of money."

While it is taking longer than some would have liked, Aiello pledged that the CBD would not let the study sit on a shelf.

"We need to implement it," she said. "What's the point if we don't implement it?"

As the Bay Area Reporter noted at the time of its release, the 70-page Castro Retail Strategy recommendations included developing a brand identity for the Castro commercial district, showcasing the businesses that already exist, and proactively reaching out to property owners and commercial brokers to discuss with them the types of businesses that would generate support from the neighborhood.

Surveys of residents and shoppers as part of the development of the retail plan revealed a bakery, butcher shop, and additional clothing stores, particularly for women, were among the businesses deemed most desirable to attract to the Castro. And many people called for a Trader Joe's, which twice now has eyed locations on upper Market Street only to abandon them due to parking and traffic issues.

A major hurdle that Castro leaders learned from surveys of brokers is that there is not much excitement for the retail spaces in the neighborhood. They are either too small or oddly shaped or too large to fit the needs of most retailers.

"One thing we learned when we did broker focus groups is so many of the brokers focus on downtown. That is where big business is interested in, there are big properties, and they can make a lot of money," said Aiello. "Brokers are not very excited to come up here and put a lot of work into filling these properties. If the property owner doesn't bug them, they sit."

To drum up excitement, the CBD would like to create a quarterly newsletter it can send out to brokers highlighting the vacant storefronts available and promoting those businesses that have recently moved into the Castro.

"We want to keep the Castro and upper Market in their mind so they don't forget about us," said Aiello.

Dan Safier, president and CEO of the Prado Group, echoed those comments during a recent planning commission meeting. His company won approval to revamp Sullivan's Funeral Home at 2254 Market Street and its adjacent parking lot into a mixed-use building with 45 apartments and 5,217 square feet of commercial retail space.

The company does not have any specific retailers in mind for the space, which it purposefully designed to be flexible in terms of how it is divided up.

Referring to the Castro Retail Strategy, in which Prado took part, Safier noted that "one conclusion that came out of that study is we need to get more brokers engaged in upper Market and interested in leasing spaces up there and bringing tenants up there."

Unlike with its property at the corner of Dolores and Market streets, whose sole retail tenant is Whole Foods, Safier said it is looking for non-formula retailers to move into its new building.

"This area does need some mini-anchors," said Safier. "We believe there may be some kind of food uses that can serve as, or even a small market serve as, a way to bring people into the area."

Castro vacancies in flux

With half a dozen more in-fill projects featuring housing over retail spaces slated for upper Market Street, the number of storefront vacancies in the Castro will continue to be in flux for some time.

When the retail report was released, it noted at the time that there were 33 vacant storefronts either along Castro Street, a portion of 18th Street, or along Market Street between Castro and Octavia Boulevard.

The number was a bit misleading, however, as several of the retail spaces included in the count were actually already spoken for by businesses that had yet to open. Since the report's publication, some of the places that are now open include Soulcycle (400 Castro Street); Philz Coffee (549 Castro Street); Strut, the gay men's health clinic (470 Castro Street); and Flagship Crossfit (160 Church Street).

The report did note that the Castro retail district's 8 percent to 9 percent vacancy rate had remained "largely unchanged" over the past few years "due to a handful of persisting vacancies."

A count by the B.A.R. Tuesday morning found 19 ground floor storefront vacancies in the area for lease that have yet to announce any business moving in. Another 13 retail spaces that appear to be vacant are in fact claimed by retailers or restaurateurs.

Yet any space that is not currently attracting customers can give the appearance of a commercial district in decline, as the retail strategy noted.

"While some residents of the neighborhood may be familiar with what is happening with these storefronts, visitors from abroad and the larger San Francisco community are not aware of pending development plans or legal issues that prevent some from being leased," stated the report.

Along Castro Street for example, there are three retail spaces for lease on the street: at 468 Castro where Italian grocer A.G. Ferrari had been; Citizen Clothing at 489 Castro Street is set to close soon; and 415 Castro where a discount sunglass store had been.

A number of other vacant storefronts are spoken for on the 400 and 500 blocks of Castro.

At the former Patio Cafe space at 531 Castro Street, landlord Les Natali continues to seek someone to run the Hamburger Mary's franchise he won approval for in December 2014. Signage in the window touts "no investment required."

The storefront has sat vacant for 14 years as Natali remodeled it and fought with city planners over zoning issues. Last fall, amid criticisms from fellow merchants on the lack of progress to reopen the space, Natali and his lawyer told the B.A.R. they were in talks with a potential owner-operator for the restaurant. Neither responded to a request for comment for this story on the status of the negotiations.

Across the street at 544 Castro Street, a restaurant to be called Mason's by Richard Hamer is expected to open in the location. Hamer, who is also planning to open a restaurant called Finn Town at 2251 Market Street, did not return a call seeking comment.

And nearby, at 556 Castro Street, the Ice Cream Bar in Cole Valley announced last April it would open its second location where L'Occitane had been. But the company has run into build out issues with the roughly 1,100 square foot space. A spokesperson told the B.A.R. they are working toward an opening but no date has been set.

On the 400 block of Castro Street, LaserAway Skin Care Spa wants to open its second location in the city at 410 Castro Street, a long vacant space that once housed a cellular store. The formula retailer, which was founded in West Hollywood, is scheduled to go before the planning commission in April to secure the permit needed to move into the storefront.

Along Market Street several other storefronts could be revived or opened this year. Sausalito's Sushi Ran plans to open in the former Pesce space at 2223 Market Street, while Drysdale Properties, a local affiliate of Berkshire Hathaway HomeServices, is seeking permits to open a satellite office at 2324 Market Street.

The new restaurant will be called Nomica, according to Suzie Buchholz Tome, who is married to chef Yoshi Tome, and will feature "modern Japanese cuisine and a full bar showcasing, among other things, specialty cocktails with Japanese and Okinawan spirits. We expect to be open by late spring."

A 4,000 square foot market hall called the Myriad with small stalls for local food and clothing purveyors is being built in the ground floor of 2175 Market Street. Nearby at 210 Church Street (at Market) Santa Cruz-based Verve Coffee Roasters had announced a year ago it would move into the corner spot where Veo Optics had been.

And further up the street, the Apothecarium medical cannabis dispensary has been in talks to relocate into 2029 Market Street, the site of various restaurants over the years. In early December Berkeley-based Direct Urgent Care signed a seven-year lease for the corner ground floor space and the adjacent storefront in Linea, the mixed-use development at Buchanan and Market streets.

Despite the lack of interest among brokers, the Castro continues to be a draw with business owners, Aiello told the B.A.R. , pointing to the constant flow of retailers looking for spaces in the neighborhood. But far too often the timeline from when a business signs a lease to when it opens its doors, she noted, takes longer than many would like.

"It does take a long time for businesses to actually move in, particularly when they are making physical improvements to the building," said Aiello.