Potential tenants await ‘critical mass’ of workers and residents
From rail yards, parking lots and vacant lots to thousands of housing units, a world-class hospital complex and a cluster of life sciences and tech companies, Mission Bay has developed in just 15 years into a new, vibrant San Francisco neighborhood. But certain amenities remain scarce. There are few stores and restaurants for a neighborhood that is expected to someday have 6,000 housing units.
“There is always a catch-22 with retail where retailers want to be in successful new developments, but want to wait to commit until critical mass is there,” said James Kilpatrick, President of NAI Northern California, a commercial real estate firm.
Some upcoming projects stand to add to the mix of retail tenants. Strada Investment Group’s condo development at Block 1 is slated to bring 25,000 square feet of ground floor retail, and the planned SOMA Hotel project on the adjacent land will provide much-needed restaurant and meeting space. Most of the land-use designations in Mission Bay allow retail, according to Catherine Reilly, project manager for the city’s Office of Community Investment and Infrastructure. The 4th Street and King Street corridors are the primary concentrations of the retail, with more within UCSF’s campus, on 3rd Street, and in the residential areas, she said.
As yet the retailers have largely not arrived, and the massive fire that destroyed BRE Properties’ MB360 apartments on March 11 may delay the development of the Fourth Street neighborhood.
Most people involved with Mission Bay’s planning and development point to the opening of UCSF’s $1.5 billion hospital complex there next year as a tipping point needed for the arrival of necessary neighborhood-serving retail.
“What I would categorize Mission Bay as, and what it has been for several years, as far as retail is concerned, is an emerging market,” said Peter Osborne, owner of Mission Rock Resort, a restaurant he revamped and opened in 2012 on Mission Bay’s waterfront. “There have to be consumers for a market. On a transient level, that consumer base has been growing slowly. And now it’s growing on a residential level with some 4,000 beds coming online in Mission Bay. So that changes dramatically the opportunities for commercial growth as far as services are concerned.”
NAI’s Kilpatrick agreed. “At this point it’s clear that the area will support significant retail. Office tenants interested in planting a stake will need to get something going, but retailers don’t seem to be feeling the heat yet,” he said. “There are only a few retail spaces being openly advertised and it seems that those involved realize more bodies and jobs are needed before retailers will make substantial time and money investments into the area.”
Source: San Francisco Business Times
