Big names eye real estate in blighted SF downtown

Josette Melchor spends much of her time devising ways to lure art lovers into the contemporary exhibition space she runs in downtown San Francisco, halfway between the city’s Civic Center and bustling Union Square.

She also spends time making sure other people stay out.

“We don’t have open doors, ever. They’re always locked,” said Melchor, whose Gray Area Foundation for the Arts sits at the convergence of the Tenderloin and Mid-Market, two of the city’s most downtrodden neighborhoods. “We must see 100 crimes every week out of these windows, and although the city wants it to change, it hasn’t happened.”

The foundation’s arrival in 2009 was heralded as the start of a trend that would culminate in a unique creative hub along Market Street, one of San Francisco’s busiest thoroughfares, where the wide sidewalks are packed most days with tourists, street performers and employees from the nearby financial district.

Yet the five block stretch of prime real estate known as Mid-Market remains a sea of boarded-up storefronts and “For Lease” signs, and transients are the most visible occupants. The most common crimes in the area are drug deals and muggings, according to San Francisco Police Department data.

But a new crop of potential tenants — Twitter Inc., the American Conservatory Theater and the organizers of the annual Burning Man festival — and a recently announced Mid-Market tax incentive plan are renewing hope that a transformation is finally coming.

“I think the time is now and we’re going to see some bravery,” said Marian Goodell, director of business and communications for Burning Man, which held its first gathering in San Francisco in 1986 and has based its offices there ever since. “I’m really optimistic that some magic is going to happen.”

The tax proposal announced Feb. 7 by Mayor Edwin Lee and two city supervisors is an attempt to solve two pressing problems: the general reluctance to take a chance on Mid-Market and the threatened exodus of Twitter and other prized businesses from San Francisco to parts of the Bay area where real-estate costs are significantly lower.

“Keeping companies like Twitter helps us create jobs, boost our local economy and, in this case, can be a catalyst to transform our central Market Street area,” Lee said of the plan, which would offer a six-year payroll tax exemption for companies that relocate to the area. The plan must be approved by the Board of Supervisors.

Jennifer Matz, director of the city’s Office of Economic and Workforce Development, described Twitter as “the big fish” the city hopes to lure with the new incentive, though it would be available to any for-profit business with a payroll above $250,000.

A spokesman for Twitter, which is quickly outgrowing its current headquarters three blocks south of Market Street, declined to comment on the city’s claim that it is considering leasing the massive former San Francisco Furniture Mart. The social networking service currently employs about 350 people, but has said it expects to expand to several thousand over the next five years, Lee said.

With or without Twitter, the positive effects of a Mid-Market tax exemption would ripple throughout the city, said Jim Lazarus, senior vice president of the San Francisco Chamber of Commerce

“San Francisco remains a very attractive place for people to live, and yet we’re losing jobs,” he said. “This will help bring the kind of employment density into the area that it desperately needs.”

The efforts to bring new blood to Mid-Market also are eliciting praise from groups in the neighboring Tenderloin — home to the city’s highest concentration of parolees but not a single full-service grocery store.

“We need an edge, because right now we just can’t compete with other neighborhoods on an even playing field,” said Randy Shaw, executive director of the nonprofit Tenderloin Housing Clinic. “Maybe with what’s going on in Mid-Market, businesses will think of moving here.”

Others caution that it’s still too soon to declare a Mid-Market renaissance. And the would-be tenants themselves acknowledge that nothing is set in stone.

The American Conservatory Theater, currently located a block from Union Square, is planning to expand into a $100 million Mid-Market arts complex that would include a 300-seat theater, housing for visiting artists and various other facilities. ACT has found the land — a 200,000-square-foot lot at the corner of Turk and Market streets — but is still seeking the partners and funding it would need to complete the deal.

“Either it’s going to happen or it’s not going to happen in the next six months,” said ACT executive director Ellen Richard.

Burning Man has narrowed its search to three Mid-Market sites, including the historic Warfield Building, but the organization remains uncertain it can afford the move, Goodell said.

In the meantime, Melchor is continuing to talk up the neighborhood’s potential while dealing with the harsh day-to-day realities of being a lonely pioneer.

“We’ve become this beacon in the area, but there’s no one else to help balance out what’s going on all around us,” she said on a recent afternoon, after politely turning away a man who knocked at the door asking for money. “We have a five-year lease. After that, we’ll have to see.”