Salesforce Transit Center’s cracked steel beams aren’t just affecting the commutes of thousands of Bay Area residents. It also seems to have thrown retailer’s plans for a loop, too.
Interest in leasing retail space in the many vacant spots within the $2.2 billion transit center has plummeted since the problems with the steel beams were discovered in September, according to transportation officials speaking at a public Transbay Joint Powers Authority meeting Friday. The TJPA manages the transit center.
That’s put a dent in the transit center operating budget too, as projections to rake in $5 million for the 2019-20 Fiscal Year from retail rent were slashed by about $2.1 million, those documents project.
That chunk will come out of the transit center’s $31.8 million operating budget for the year. The San Francisco Business Times first reported the drop in rent revenue.
At a meeting of transportation officials at TJPA offices Friday morning, Erika Elliott, the San Francisco senior vice president of retail services at Colliers International, said the number of interested tenants dwindled.
“We had four tenants for each space lined up. Then there was the crack,” she said.
Previously, they’d receive about 10-12 inquiries on retail spaces every week, she said. Now? That number has dropped to about two to three interested parties who reach out weekly.
Only about one-third of the Salesforce Transit Center’s 36 retail spaces are either leased, or about to be filled, Elliott told the San Francisco Examiner.
By the numbers, nine retail leases have been signed and six have signed letters of intent to lease retail space there. That leaves 21 retail spaces not spoken for, though Elliott said there is good news for the transit center on that front — about 15 of those spaces are in some form of official negotiation, “trading paper,” in leasing parlance.
“We’re still closing deals, still negotiating offers, we’re still getting interest,” she said.
And, for those who have signed deals, they are still happy to be moving into the transit center.
“I am so excited, it took us a year to get in,” said Paula Capovilla, co-owner of Venga Empanadas, which has locations in the Mission and in Redwood City.
When news of the cracked steel beams first hit, Capovilla said they were ready to stick it out.
Their main concern was not having any other retail neighbors in the transit center to drive foot traffic. “We wanted to know if they rented all the places or not,” she said.
Transit center officials calmed her fears. “So OK, we need more time? It’s good for us to have a little more time,” she said. She’s still excited to bring flavor from the Mission District to the transit center, “so people can know more about the Mission neighborhood.”
Likewise, representatives from Philz coffee said they’re with the transit center for the long haul.
“Clearly our first reaction was ‘darnit,’ because we’re really anxious to open,” said Jim McPhail, chief growth officer of Philz Coffee.
Philz will open two locations in the transit center, one on the ground floor that rushed coffee drinkers can only order from using their mobile-phone app, and a more traditional Philz elsewhere in the transit center.
Despite the delay, McPhail said Philz was chill about the whole ordeal. “We’re a San Francisco-first company. Anything we can do to be a part of the community is huge to us,” he said.
And though the reduction in rent is a hit for the transit center, TJPA officials remained upbeat.
“While there has been a slowdown since the closure, we are already seeing interest pick up again with repairs underway,” said Christine Falvey, a TJPA spokesperson, in a statement. “We are confident that once we reopen, we will recapture that momentum as people see that in addition to being a transit hub, the center is a destination for the entire Bay Area.”
The cracked steel beams are scheduled to be repaired by June, though no official reopening date has yet been announced.