April 30, 2010
14 New Leases On (And For) Life On Union Street
The first comment from our post entitled The Union Street Blues ("according to the Chronicle 35 businesses "went under from the start of 2008 through the second quarter of 2009 in the six blocks on Union Street between Octavia and Pierce" while 7 opened up") four months ago: "There's nothing price won't fix."
Three restaurants — American Cupcake, Roam Artisan Burgers and Marengo on Union (selling wine, whisky and sliders) — plan to open [on Union] in May. Later this year, 1875 Union St. will welcome Unwind on Union, Cafe des Amis will finally open at 2000 Union St. and the old Bayside at 1787 Union St. will open as Brick Yard Bar and Restaurant on June 5.
They join the five retailers who have opened on Union (and a stretch of Fillmore just north of Union) since Dec. 22. At least six more addresses have deals for new tenants.
“It took owners a while to see that if they wanted to lease their spaces, they had to reduce their prices. It was not something they had ever had to do in the past,” said Peter Mikacich, a broker with Brick & Mortar. “Landlords who came to grips with that early in the process were the first to lease up space.”
According to Mikacich rents on Union Street have come down about 25 percent, from $80 to $100 a square foot for the best locations previously to $60 to $75 today.
First Published: April 30, 2010 9:00 AM
Comments from "Plugged In" Readers
american cupcake seems to have garnered good yelp reviews during its trial opening period.
that said, does the neighborhood need another cupcake shop?
can someone create a derivative whereby i can short D7 cupcake stores?
Posted by: resp at April 30, 2010 9:17 AM
i'm with you resp. and frankly, most of these cupcake places are pretty mediocre, but thats coming from a guy who thinks duncan hines yellow cake mix is as good as it gets. but back to the main point, 90% of these cupcake stores will be out of business within two years. opening a cupcake store right now is like buying stock in pets.com last year.
Posted by: anon$random at April 30, 2010 9:31 AM
I agree that the cupcake market is saturated. I feel the same way about 'artisan' burgers.
Posted by: joh at April 30, 2010 9:37 AM
As I've suggested before, cupcake stores (and one's proximity to them on foot) are the third pillar of SF real estate valuations, along with google industrial complex money and explicit/implicit govt. intervention :)
Cupcakes taste delicious on the hour-long bus ride to work every morning (or late morning, more accurately).
Posted by: dub dub at April 30, 2010 9:46 AM
Good, but I'm still not going to patronize any of these places.
I ate 1/3 of a cupcake in 2005... That was enough.
Union St. still needs a grocery and a drugstore, and a GOOD coffee place. Still, something is better than nothing!!
Posted by: sleepiguy at April 30, 2010 9:57 AM
The expansion of boutique cupcake shops is an indicator of the continued enfeeblement of the home kitchen. Ironic isn't it: we build kitchens that are more and more kick ass with huge commercial stoves and fridges, yet fewer people use them.
I mean how hard is it to bake cupcakes ? When I got into a time crunch I switched from layer cakes to cupcakes just because they were so much easier to whip out.
Posted by: The Milkshake of Despair at April 30, 2010 10:06 AM
Posted by: scurvy at April 30, 2010 10:10 AM
"I mean how hard is it to bake cupcakes ? When I got into a time crunch I switched from layer cakes to cupcakes just because they were so much easier to whip out."
Your cupcakes of despair bring all the boys to the yard?
Posted by: Brian at April 30, 2010 10:14 AM
The good news is that the rents are way down and businesses that weren't profitable at the higher rents are now profitable at the lower ones. That puts people to work.
Though these are minimum wage type employers, at least it takes people off of unemployment and gets them back to work. That drops the unemployment numbers, though unfortunately, tax revenues suffer, as people making above the minimum wage have to take minimum wage jobs.
However, its a first start towards a slow rebuilding of an economy that didn't produce anything and just ran from one bubble to the next. I'd rather see college educated people baking cupcakes than doing nothing (on unemployment) or building/selling/remodeling/staging far more houses than the country ever needed.
Posted by: tipster at April 30, 2010 10:41 AM
Milkshake of Despair, you're so right. There is a perverse dynamic at play here: we work so hard to make so much money to buy sub-zeroed kitchens, but then -because we work so much- we don't have time to use them. It's an example of the difference between Europe and US: more time than money there, vice versa here. Take an average kitchen in Lyon/Rome/Amsterdam and chances are it's an over-utilized Ikea outfit. Here, it's a deserted temple of steel & granite. Not sure who got it right...
As for the abundance of cupcake stores, beats me. As for frivolous retail stores coming up left and right it speaks to the rosy business plans that are used to justified burning rich spouse's money, LOL. It's more fun to open an overpriced gourmet olive oil boutique than to sweat and open a grocery store. But guess who's been making $$$ in the face of the recession, and who's going to go bust in 6 months?
Sell to the masses, live like the classes. Sell to the classes, live like the masses.
Posted by: asiagoSF at April 30, 2010 10:42 AM
Note that a new restaurant/lounge called American Cupcake is opening at 1919 Union St. Saw it on Daily Candy...white padded leather and all. Ladies throwing bachelorette parties and men looking to pick up twenty-someethings will have a new venue.
Posted by: I prefer restaurants and bars for grown-ups at April 30, 2010 10:45 AM
what about the cupcake shop's landlord's housekeeper that got laid off cuz his rental income is lower now?
oh that must be the one working at the cupcake shop now.
Posted by: resp at April 30, 2010 11:03 AM
To follow tipster's train of thought, these lower rents provide an even more enduring good than just allowing small businesses to become profitable. The lower rents take some of the steam out of the commercial speculation binge which in turn will ripple into the general RE market and then enable more small businesses to have a chance of owning their bricks.
Landlords, whether commercial, residential, or industrial should center their business model around providing a product : viable space. The model of making a profit off of speculation isn't sustainable.
Posted by: The Milkshake of Despair at April 30, 2010 11:18 AM
On a related note, our landlord appears to be coming to grips with the fact that a new business is not going to swoop in and rent some of their open office space. They're now willing to negotiate on our current lease if our company expands into the open offices next door.
Posted by: EBGuy at April 30, 2010 11:25 AM
I am with sleepiguy ...Union St. still needs a grocery and a drugstore, and a GOOD coffee place. Those are the three items (plus of course the Apple store and a couple of theaters) that keep Chestnut Street humming.
Posted by: Oceangoer at April 30, 2010 2:24 PM