The Sheridan Report
by Matthew C. Sheridan
Thanksgiving weekend, South of Market. Rain pelts, traffic lights blink and trash billows. No one seems to be around except for the homeless camped out in every other doorway. The folks who do have housing here are gone right now—back to their families, back to suburbia, back home to celebrate. Renters and owners alike—gone.
Gone, too, is the neighborhood. There’s not much life here.
There was a time when South of Market was the next up-and-coming neighborhood. It had crumbling old housing stock, warehouses and cheap rents; in short, a perfect recipe for a neighborhood on the rise. Add in a lively gay scene, punk rockers, drugs, art, dirty streets, dead-end alleyways, entrepreneurs, and blue-collar jobs and you had the ingredients necessary for a radical transformation of San Francisco’s forgotten ‘ hood. In the daytime, commerce was conducted in the shops and stores that helped keep San Francisco churning. At night, the streets bustled with leather bars, nightclubs and restaurants. Abandoned lots were cordoned off for performances from fire-breathing robotic monsters by artists like Mark Pauline. Zoning and housing laws were ignored. Old beer factories were converted into live/work spaces for speed freaks, artists, gays and musicians.
The neighborhood bustled with a right mix of grittiness and commerce. Beginning in the mid-1970s, places like The Stud and Hamburger Mary’s opened for business, and in the 1980s joints like Slim’s and the Paradise Lounge, along with hundreds of other businesses and entrepreneurs, helped turn this quadrant of San Francisco into a mecca for the disaffected, suburban teenagers and the sexually liberated. Just like good schools attract the right elements into a community, the right elements South of Market brought new life to the city. A community was born.
Today, South of Market often looks like a ghost town. Yes, during the day the muffler shops and electrical supply stores are still operating, but many of the old daytime businesses are closed. With a few exceptions, most of the clubs and bars are closed as well. The dot-com era came and went, leaving in its wake the shuttered businesses from a bygone era. When the dot-commers arrived with their foosballs and endless start-up capital, commercial landlords opted for top-dollar rents and 10-year leases, abandoning the tried and true local businesses of the day. Music venues lost their leases, artists’ studios shut down and the community went into shock. Live-work loft developments sprung up everywhere. But, of course, in the end, the dot-com era imploded. Landlords, who had dreamed of phenomenal rents for years to come, were left sitting on vacant buildings. The community that had sprung up and created an enclave for the misfits of the day was now dead.
The November death of punk rock impresario Dirk Dirksen, who ran the Mabuhay Gardens and the On Broadway in North Beach in the 1980s, is a reminder of how just one person can single-handedly alter the social landscape of the city. Dirksen, a mouthy music promoter, helped propel the punk rock music scene in San Francisco, creating venues for local bands, and allowing acts from around the country and the world to perform for local audiences. Before Dirksen, the rock scene in the Bay Area was dominated by Bill Graham and filled with bland, tired acts that left young disgruntled audiences uninspired. Dirksen, along with a few others, helped make San Francisco a hospitable base for punk rock and alternative bands, and their legions of fans and followers. The onslaught of suburban youth attracted to San Francisco helped transform the city, just as the gay rights movement had a decade earlier. The remnants of Dirksen’s legacy are everywhere. San Francisco now has entire neighborhoods filled with “alternative” types running businesses, working and, of course, playing music.
Jobs on the Rise
Today, the cultural identity of San Francisco continues to be a magnet for many, but employment is an even greater draw. The much-anticipated opening of the Westfield San Francisco Centre between Market and Mission streets has help contribute to the consistent job gains experienced of late throughout the Bay Area. The new mall, anchored by upscale department store Bloomingdale’s, helped push retail jobs up by 1,200 from September to October 2006. Overall, the San Francisco metro area, which includes the counties of San Francisco, San Mateo and Marin, experienced the largest job growth in over 16 years from September to October. According to the state’s Employment Development Department, 4,800 jobs were added during this period. The number of jobs in the metro area now stands at 970,000, still well short of the dot-com highs reached in early 2001, when the number peaked 1,087,800.
Year-over-year employment rose by 17,800 jobs or 1.8% between October 2005 and October 2006. It was the nineteenth consecutive month that the metropolitan area has posted net job gains. Despite these gains, expect a seasonal drop in jobs to occur this month as the holiday season comes to an end.
The EDD’s strong job growth numbers for San Francisco are confirmed by The Conference Board’s data series tracking online job vacancies. When adjusted by the size of their labor force, San Jose and San Francisco have the highest job-advertising rates in the nation according to the nonprofit business group. In fact, there was a 27% increase in online ads between October 2005 and October 2006.
Rental Rates
Over the last year, the rental market has reacted to these employment gains as predicted. The average asking rents for all unit types reached $2,141, up over 13% from the third quarter of 2005, according to MetroRent. The following are the average rents, based upon unit type, through the third quarter of 2006: studios average $1,208, one bedrooms average $1,802, two bedrooms average $2,552 and three bedrooms average $3,000.
Selecting the right apartment in the right neighborhood is essential for most renters. “Space, quality and location are the three elements tenants are looking for,” reports James Wavro, a leasing specialist in San Francisco. “Most tenants ask themselves, ‘What am I willing to trade off?’ in order to find the right apartment.”
In today’s rental market, selecting the neighborhood to match one’s personality is key for most. Each little corner of the city has something unique to offer new tenants. “We’ve found that people absolutely must live in the Marina or Pacific Heights, while some wouldn’t be caught dead there,” comments Carolyn Chandler of Chandler Properties. She says today’s tenants are more opinionated than ever about where they’ll live. A lot of people have just graduated from college, are seeking a two- or three-bedroom apartment, and insist on Pacific Heights, South of Market, Noe Valley or other hip areas. The rental market has reacted to this phenomenon, with rents across the city more level than they used to be, reported Chandler.
What lies in store for this new generation of San Franciscans? What cultural phenomena will arise from the corners of this foggy town? Much of how the city has evolved over the last half-century arose not from policies or regulations, but from actual people, movements and historic events. From the Diggers to Harvey Milk, People’s Temple to punk rock, the disaster of Loma Prieta to the dot-com boom and bust—these were catalysts for change, and for better or worse they helped shape our world. Will our schools improve, thus allowing the city to retain more families? Can a mayor really make a difference with homelessness? And perhaps most important for property owners, will some of our once-thriving neighborhoods be revived?
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. “The Sheridan Report” does not make any guarantee, warranty or representation as to the completeness or accuracy of the information contained herein. Matthew C. Sheridan is the editor of SF Apartment Magazine and the East Bay’s Rental Housing magazine. For more information, please visit www.sheridanreport.com. Copyright © 2007 by SF Apartment Magazine. All rights reserved.