At the heart of San Francisco’s post-COVID recovery blues are empty spaces, from downtown offices to old Fisherman’s Wharf mainstays to neighborhood retail.
Hunger for good news could explain the recent conga line of bigwigs from City Hall, the Chamber of Commerce, and more at the opening of a new all-you-can-eat buffet chain in Pier 39. Fire + Ice was supposed to open in 2019, but city codes and COVID stretched out the timeline like the saltwater taffy sold just down the pier.
District 3 Sup. Danny Sauter was at the debut, and he told The Frisc he’d like to speed up the process with a one-stop shop for businesses trying to open in San Francisco.
Right now, would-be owners must navigate multiple agencies in an often-labyrinthine process. But Sauter, elected last November, is finding out that SF politics around permitting are just as complicated as the actual process of getting permits.
Along with Mayor Daniel Lurie, Sauter and other supervisors have passed or proposed a raft of reforms. But Sauter in particular must perform a delicate dance. Just in his district, there are empty downtown offices, struggling Union Square retailers, fiercely protectionist enclaves in North Beach and Chinatown, and the faded glory of Van Ness Avenue.
Sauter recently pushed through reforms to let chain stores more easily move into Van Ness’s vacant spaces. But he and his allies are having a harder time bringing changes to North Beach and Chinatown.
Reforms that could help fill empty neighborhood spaces — which mainly means small businesses — have in fact run into small-business opposition. Several merchant associations have said they don’t want some of the changes being proposed.
What is and what might be
Some reforms have passed fairly quickly. In July, Mayor Daniel Lurie extended a waiver of fees for a new business’s first year. City Hall also passed a law to cut permit times and speed up new openings. These measures passed the Board of Supervisors unanimously.
More reforms are making their way through City Hall, and here’s where the story gets more complicated. For example, Sup. Myrna Melgar introduced a bill to erase size limits on commercial spaces in the Castro, North Beach, West Portal, Pacific Avenue, and Polk Street commercial corridors.
Opening a store in a space larger than 4,000 square feet in those places currently requires special permits, which can add months and great expense to the process. Lifting the extra requirements is supposed to ease the hassle and help new small businesses.
Immigrant-run businesses are not as well-capitalized as others, and our small mom-and-pop businesses don’t always fully understand the process.
rosa chen, Chinatown Community Development Center director of policy
But merchant groups are raising alarms that the looser rules would encourage higher rents and hurt mom-and-pop shops. “Existing limits are largely responsible for the successes of our commercial corridors by preventing the incursion of larger retail uses,” merchant groups from the Castro, North Beach, and West Portal wrote in a July letter.
“We have some fairly sizable retail vacancies right now,” Castro Merchants Association president Nate Bourg tells The Frisc. Bourg says the neighborhood needs to work on existing vacancies, not create larger spaces to fill. Standing on the corner of Market and Castro, he points to the former Pottery Barn taking up more than 14,000 square feet. “We don’t need any more like that,” Bourg says, noting that it doesn’t fit the neighborhood character. “We think the rules as currently written are good.”
Top real estate firm Maven Commercial can usually find mom-and-pop clients for spaces of 4,000 square feet to about 6,000 square feet, says managing partner Santino DeRose. But above that size, potential uses narrow.
DeRose adds that Maven has no opinion about the legislation and believes both lawmakers and neighborhood groups want what’s best for the city: “We support everybody.”
In their final meeting before the August recess, the Board of Supervisors voted 9 to 2 to pass a version of Melgar’s plan that excludes the Castro. City Hall sources say the carve-out came at the request of Board president Rafael Mandelman, whose district includes the Castro.
Melgar also created a separate version that includes the Castro, perhaps hoping to keep it alive down the line. Melgar was not available for comment.
The supervisors must vote at least one more time on one version of the plan or the other when they return in September.
Fear of chains
Even though tough restrictions protect much of the city against chain stores, merchants also warn of Starbucks, Warby Parkers, and the like invading their spaces.
Rosa Chen, director of policy at the Chinatown Community Development Center, says formula retailers (as chain stores are also known) could take advantage of larger spaces and beat immigrant businesses to the punch. “Immigrant-run businesses are not as well-capitalized as others, and our small mom-and-pop businesses don’t always fully understand the process,” Chen says.
In the Castro, Chinatown, and most other neighborhoods, chain stores need special permission to open. Even homegrown businesses that have grown into chains have run into SF’s bureaucratic walls.
Lawmakers are trying to chip away at those walls. Sauter’s recent Van Ness bill, with Sup. Stephen Sherrill, loosened regulations only along a defined stretch of that major thoroughfare.
Now Melgar is teeing up new legislation (separate from the size limit rules that passed last month) to loosen some rules citywide. For example, the definition of formula retail would change from a business with at least 11 locations worldwide to 11 locations in the U.S. The bill would also eliminate the need for extra “impact studies” for large formula retail uses.
Even with these changes, a chain store would still need special permission from the Planning Commission and perhaps the Board of Supervisors to open in most neighborhoods. CCDC’s Chen says “we would rather have additional guardrails.” Streamlining new businesses is a good idea, she says, but only if City Hall can specifically exclude chain stores.
There’s another argument against neighborhood permit reforms: If it’s not broke, why fix it? Erick Arguello, president of the Calle 24 Latino Cultural District in the Mission, says they’re doing just fine: “We have the highest concentration of Latino-owned businesses in the city” and a lower than average vacancy rate. (The citywide retail vacancy rate is 6.9 percent. The Calle 24 district’s rate wasn’t immediately verifiable.)
The Mission was not included in Melgar’s plan to open up larger commercial spaces in the city; Calle 24 also signed onto a separate complaint about Lurie’s plan to speed permits. “Each neighborhood is different,” Arguello says, urging City Hall to leave neighborhoods like the Mission handle business on their own terms.
Pier pressure
Pier 39 is doing well too, by its own numbers. The city’s top tourist destination has leased 100 percent of its ground floor space, the second level has surpassed 85 percent, and sales figures are back to 2019 levels, says spokesperson Sue Muzzin.
But not all is ship-shape at Fisherman’s Wharf. The looming shell of Alioto’s is one reminder. The longtime restaurant owned by the politically connected namesake family shut its doors in March 2020 and never reopened.
Ventures like Fire + Ice are part of a major makeover called Fisherman’s Wharf Forward that includes hipper restaurants and businesses, more open space, and help for the historic fishing industry. (Alioto’s is supposed to have a date with a bulldozer, with the space converted to a public plaza.)
The new generation of businesses have already hit a patch of rough weather. SF Port records show Fire + Ice began permitted work in 2022 and finished in 2024. (Fire + Ice owner Kacee Colter blamed delays on contracting woes.) Another nearby newcomer, the brewpub Humble Sea, was supposed to open last September. It started tapping kegs in May. Owner Frank Krueger cited “the usual things” for their delays — it went through three rounds of permitting, with one taking six months to issue.
Spokespeople for the Port of SF and the Department of Buildings and Inspection reviewed the timelines and said they didn’t seem out of the ordinary.
That was the backdrop when Danny Sauter, minutes after Fire + Ice’s ribbon-cutting, discussed his delicate approach to permit reform in his own district. When North Beach and Chinatown asked for exemptions to the Lurie permitting plan, Sauter went to bat for them, and the plan now excludes those neighborhoods. (It also excludes the Calle 24 district.)
Sauter later said via email he would introduce separate reforms tailored to different parts of his district. That bill hasn’t been made public yet, but Sauter said on social media that District 3 has been “the most egregious” with its small business roadblocks. He hinted at “flexible retail” rules that end restrictions on art spaces, walk-up businesses, combination retail, and more.
He hopes he can sell skeptical neighborhood groups on the new rules, “to make sure District 3 small businesses see how the permit program will benefit them.”
Meanwhile, small businesses are also pressing for protection against SF’s plans to make way for tens of thousands of new homes in coming years. City planners estimate displacement of up to 50 small businesses a year — a tiny fraction of the 94,000 businesses operating in the city, per the city’s Office of Small Business.
The new zoning map and a package of protections will be up for intense debate once summer ends. Lawmakers will also contend with the permit reform bills that haven’t been resolved. In other words, the four months after Labor Day could reshape the way San Franciscans live and shop across much of the city.
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