Supervisor Katy Tang has proposed legislation to allow businesses to share space more easily in an effort to combat retail vacancies. (Kevin N. Hume/S.F. Examiner)

SF shops could share space to survive changing retail market

San Francisco may soon allow two different types of businesses to jointly operate within the same storefront — like a clothing shop with a cafe — to combat storefront vacancies.

The Flexible Retail legislation introduced by Supervisor Katy Tang would initially apply to the Sunset neighborhood, but she would like to see it expand to other districts and is in talks with members of the Board of Supervisors to do just that.

The City doesn’t currently permit the co-location of businesses within one storefront, but does permit a smaller portion of a business, about 30 percent of the total business area, for an “accessory use.”

Tang’s proposal would eliminate space requirements and make it easier to combine different business types. The two businesses could be operated by two different owners, which could help with paying the ever rising commercial rents in The City.

But it could also boost the experience of the shop and help smaller retailers suffering from the impacts of online sales attract more customers.

“Maybe they want to go have a coffee while they are shopping for T-shirts,” Tang told the Small Business Commission last week. “And there is just a lot of restrictions right now.”

The commission unanimously approved the legislation last week

“We are thinking outside of the box now,” president of the Small Business Commission said. “This is the kind of stuff we really need. The world is changing and if you don’t change with it you are going to be left behind.”

The proposal grew out of the Office of Economic and Workforce Development’s “State of the Retail Sector” study released in February.

“A lot of retailers have been experimenting, doing interesting weekly events to bring in more foot traffic and to build community so hopefully people will get to know those retailers and come back,” said Lisa Pagan, of OEWD. “They do not like to have sometimes coffee or other types of amenities to provide that and right now it is really hard for business to change uses without taking a lot of time to go through a process of adding a second use. This would really help businesses who want to be creative and who want to do different kinds of things at one time.”

Among the study’s findings was that “after many years of growth, San Francisco’s retail sector appears to be slowing. Sales tax revenues slowed between 2015 and 2016.” The study also said that real estate brokers said rents in commercial corridors “have plateaued” while vacancies are increasing.

The creative use of space, Pagan said, will help these businesses compete with the online market because she said people still desire a social experience. “People want to see each other, meet each other, they want to go into businesses that have an interesting experience,” she said.

The legislation would allow for a combination of two jointly operated businesses within one storefront that fall into certain categories, those carefully selected that tend to have the least controversy, such as art galleries, trade shops and limited restaurants — food establishments without onsite alcohol consumption like bakeries and cafes.

Tang said a challenge in taking the proposal citywide is the variety of restrictions of business types on commercial corridors in other supervisorial districts.

The Planning Commission is expected to vote Oct. 18 on the proposal.

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