San Francisco Needs to Act Fast to Create Real Opportunities for New Small Businesses

As a commercial real estate broker this is my third down cycle that I have experienced. In each of the others the pattern to recovery was the same. People would lose their jobs, could not find new jobs and decided to start their own businesses to survive. The point of entry for many is to go into retail opportunities.

In November of 2007, San Francisco passed an 11-store chain rule. If a retailer has more than 11 stores anywhere in order for that retailer to be able to be allowed to go into a neighborhood they would have to go through a public review process. This is lengthy process with no assurance that the retailer will receive approval. As a result potentially successful neighborhood locations could be available for these start up retailers except for other restrictions that the city has in place that actually creates serious barriers to get through.

If a proposed retailer finds a location they cannot simply rent the place and move in. First there has to be a determination as to whether their use is considered a change of use. If it falls as a change of use then that retailer is subject to a similar lengthy review process with no guarantees of approval. In addition the retailer has to hope that the landlord will wait up to six to nine months to get approval without rent which makes the prospect of succeeding in securing a retail space even more difficult and costly.

I have a 1,200 square foot retail space for lease for a local landlord. They are anxious to lease the premises and are willing to negotiate a fair deal to get it leased. We have had numerous small business owners that have expressed serious interest to put in food type retail in this location. When they go to the building permit department we typically do not hear from them again because they immediately become discouraged at the process. We next attempted to secure an architect and an attorney that specializes in zoning issues for these potential tenants. The cost to hire them run between $6-9,000 with no assurance of success paid up front. Any retailer that starts this process is looking at 6-9 months to secure necessary approvals and building permits. Next, they have to account of construction time after receiving permits, which could take another two months. A retailer today could be a year away from opening their doors. This kills any opportunity for a small business to get started and puts further pressure on people who are only seeking a way to survive in these difficult times. This does not include the loss opportunity landlords have to secure rent. This long term will mean lower property values which means less property tax paid to the city.

San Francisco needs to create a streamlined approach to securing approvals for retailers now. The city can create a fast track system that will provide real assistance to get retailers up and running quickly. There is no reason why a small 1,200-foot retailer cannot find out whether he can occupy a space in less than 30 days. The city needs to create more jobs and real opportunity for its citizens not roadblock them. All you have to do is drive down most retail streets in our city and you can see the effect of vacant stores on the remaining businesses that are trying to make it. Lets get the city to help get these spaces filled.