In an effort to fill large vacant storefronts along Van Ness Avenue, San Francisco is moving to put out the welcome mat with a streamlined approval process for chain stores.
Supervisors Stephen Sherrill and Daniel Sauter have introduced legislation to speed permitting for “formula retail” on a one-mile stretch of the Van Ness corridor between Redwood Street just north of City Hall and Broadway.
The measure, which defines formula retail as a chain with 11 or more outlets, would exempt stores that open along that part of Van Ness from going through a process that requires approval of the city’s Planning Commission and can take up to 18 months, the San Francisco Chronicle reported.
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“Van Ness is a highly trafficked city artery that has been hampered by the outdated planning code,” Sherrill said. “By reducing barriers to filling these empty storefronts, we can activate these vacancies, support property owners, and breathe new life into a corridor that has struggled to recover.”
Sherrill also has requested a hearing on large commercial vacancies downtown and along major transit routes to “analyze barriers to occupying vacant commercial spaces and identify legislative solutions to streamline permitting processes that will incentivize reuse.”
The effort to make it easier for chain stores to locate on Van Ness comes as retail store closures are surging nationwide, driven in part by several national chains that have been shutting underperforming outlets. Coresight Research is projecting that 15,000 stores will close this year in the U.S., doubling last year’s total and the highest annual number since the start of the pandemic.
For example, Walgreens announced this year it would close 12 stores in San Francisco, including two outlets on Van Ness Avenue. Other vacancies along the corridor include another former Walgreens at 790 Van Ness, which has been empty for five years, a former Staples at 1700 Van Ness and a former movie theater and gym at 1000 Van Ness.
Van Ness, which is part of Highway 101, was known as Auto Row in the last century because it was lined with large car dealership showrooms. Most of the car dealers migrated to the suburbs by the 1980s, leaving behind large retail footprints.
San Francisco’s overall retail market showed a glimmer of improvement in the fourth quarter with net absorption of 65,700 square feet, the first quarter of positive absorption in the city after eight consecutive quarters in the red, Cushman & Wakefield reported.
The overall retail vacancy rate in the city ticked down to 7.7% at the end of 2024, down from 7.9% in Q3. Nearly 4M square feet of retail space is vacant in San Francisco. The vacancy rate in the Union Square neighborhood hit 22% in the fourth quarter.
In 2019, when the retail vacancy rate in San Francisco was 3.5%, city voters passed a tax on vacant storefronts.
The tax, which does not apply to stores located downtown or in the Union Square neighborhood, requires landlords or tenants who hold leases of properties left vacant for more than 182 days to pay $250 per foot of street frontage for that year, $500 for the second year of vacancy and $1,000 for the third. When the pandemic hit in 2020, the city paused collecting the tax until 2022.
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