Union Square’s holiday decor summons up a fair bit of nostalgia for Bay Area residents, but on Tuesday, it served as a reminder that the iconic shopping district must change in order to survive.
Against that backdrop, Mayor London Breed and a host of business leaders unveiled a new strategy for Union Square created by the Union Square Alliance, the city’s Office of Economic and Workforce Development and San Francisco Municipal Transportation Agency meant to help usher in a new era for the neighborhood.
The plan involves some common sense goals around cleanliness and safety for shoppers—in line with efforts to boost the number of police officers and security personnel in the area—but also calls for zoning and planning changes to increase the flexibility and tenant mix in Union Square.
“You can have a great retail establishment on the first floor, an amazing restaurant on the second floor and office space on the third floor,” Breed said. “In the past, many of our restrictions around what can happen in spaces made it difficult to do that.”
Among other changes, the plan calls for opening up residential and office uses for all floors above ground level. It also proposes expanding the definition for ground floor retail to allow more tenants to move in.
Marisa Rodriguez, executive director of the Union Square Alliance, said that the current zoning—which restricts much of the district to retail—is a legacy of an economy that no longer exists. The pandemic accelerated a shift to online shopping while also revealing the limitations of Downtown.
“This is not something that was dreamed up in a policy meeting. This is real life and seeing and what works and what doesn't,” Rodriguez said. “We’re not saying if you want to open three levels of retail that you can't; we’re saying if you don’t want to, you don’t have to.”
Although Union Square accounts for only 0.6% of the city’s total landmass, it is responsible for an outsized proportion of the city’s sales tax revenue and retail employment. According to data from real estate brokerage Cushman & Wakefield, the retail vacancy rate in Union Square sits at around 14%, nearly double the number seen in 2019.
The view that Union Square should transform from an area almost exclusively focused on retail is a relatively recent phenomenon. It was only in 2018 when retail-to-office conversions in Union Square were subject to an 18-month moratorium as city planners weighed declining demand for retail space against preserving sales tax revenue.
But in light of a looming budget crunch, political leaders are embracing the idea that Downtown needs to change.
“The Strategic Plan appropriately prioritizes safety and cleanliness, while also revisioning new uses for this neighborhood that will draw tourists and locals alike,” District 3 Supervisor Aaron Peskin said in a statement.
Rodriguez pointed to the I. Magnin building as a model for Union Square’s transformation. Previously owned and occupied by Macy’s, the building was purchased in 2019 with plans to revamp it into a mixed-use development with luxury condos, office space and retail.
Rodriguez argued that retail is far from dead, particularly in the luxury segment that makes up many of Union Square’s anchor tenants. But she added that changes are needed to bring in more restaurants, museums or other attractions.
“I think we’re going to have more food and beverage opportunities, more museums or cultural institutions. Maybe a university or opportunities for manufacturing,” Rodriguez said.
San Francisco Planning Director Rich Hillis said legislation is likely required to more easily allow conversion from retail to office for spaces above the ground floor. Currently, office uses are not allowed on the second floor and require conditional use approval for floors three through six, among other restrictions.
And although retail-to-residential conversions are largely allowed by current zoning, Hillis said changes to planning code can help ease the process. He pointed to the developers involved with the I. Magnin project, who were forced to design a special carve-out to meet light and air requirements.
Of course, even bullish business leaders acknowledge that it may take years for any of the proposed changes to make a visible impact. At least for the time being, city and business leaders are focused on bringing in pop-ups to enliven vacant storefronts and public realm activations.
That means, at least in the short-term, visitors should expect more programming in the vein of the Union Square ice skating rink and photo ops like the The Friends Experience.
“I think moreso than almost any other neighborhood, you’ve got cultural uses, you’ve got hotel uses, you’ve got residential offices and retail in Union Square,” Hillis said. “In order to encourage that intersection, we have to be more flexible on the zoning.”