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Shopping Centers Today -> October 1999
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After the Fall
Union square becomes heart of upscale retail
by Kevin Kenyon
Ten years after one of the costliest natural disasters in U.S. history rocked the Bay Area’s foundation, San Francisco’s premier shopping district — Union Square — has undergone a transformation of its own — into a retail powerhouse with an international draw.
Today the greater Union Square trade area is widely regarded as a shopper’s paradise, generating $1.5 billion in sales annually from five million square feet of retail space spread over 17 city blocks, according to the San Francisco office of CB Richard Ellis, the Los Angeles-based retail services firm.
It also ranks fifth in the nation in terms of asking rents (an average of $250 per square foot, with a high of $500), trailing retail powerhouses like Fifth Avenue and Madison Avenue in New York City and Rodeo Drive in Beverly Hills.
San Francisco’s Union Square generates $1.5 billion annually. The 17-city-block area features retail mainstays, such as Macy’s, and upscale European boutiques.
The situation, however, was far different back in 1989, when rents were closer to $150 per square foot and Union Square was populated mostly by independent boutiques, according to Jill Paul, CB’s retail specialist for San Francisco.
“There’s been a lot of redevelopment over the past 10 years, and what that’s done is allowed national and international retailers to break into the market,” she said, noting that those retailers now identify Union Square as a “must” presence along with the world’s other well-known retail corridors.
The fact that Union Square is even being compared with some of the world’s most famous shopping addresses shows how far the area has come, said Julie Taylor, vice president of Terranomics Retail Services, San Francisco.
“There are a far greater number of upscale European boutiques, and Union Square is much more like the best shopping streets in the world than it was 10 years ago,” she said. “You could never make that comparison back then.”
Although there were a few sophisticated retailers, such as Gucci, back in 1989, Taylor said the majority of retailers were more regional and local in nature.
Today, highlighted by the expansion/renovation of Macy’s flagship store and the addition of a 24,000-square-foot Levi’s superstore in August, as well as new retailers Sephora, bebe, Agnes B., Kenneth Cole and Prada, it could be argued that Union Square is in the midst of a retail renaissance.
Those stores, all of which signed on in the last two years, add to an impressive list that includes high-end fashion retailers such as Neiman Marcus, Saks Fifth Avenue, Giorgio Armani, Louis Vuitton, Ultimo, Escada and Wilkes Bashford — forming a tenant mix that any shopping center owner would be envious of having.
While observers say Union Square never relinquished its title as the city’s premier shopping district, the area did suffer, along with the entire city, from the aftereffects of the Loma Prieta earthquake.
The magnitude 7.1 quake, which hit on Oct. 17, 1989, struck the Bay Area just before the third game of the World Series at Candlestick Park. It killed 67 people, injured 3,757, and caused an estimated $7 billion dollars in property damage.
But while Union Square itself suffered little physically from Loma Prieta, it did trigger a series of events that were far more damaging.
Following the earthquake, insiders say, many residents began avoiding the downtown area, opting instead to shop in outlying areas like the East Bay across from the Oakland Bay Bridge, which was badly damaged along with other transportation links in the region.
Tourism, which Union Square relies heavily on, also took a hit for a couple of years after Loma Prieta.
The low point, by all accounts, was 1994, when the recession chilled the economy of the entire city, making things even more difficult for Union Square businesses.
“There were a lot of vacancies around Union Square at that time,” said Jim Chappell, president of the San Francisco Planning and Urban Research Association, a 40-year old coalition of business leaders and citizens that develops solutions to urban problems.
“People still thought of it as our premier shopping and hotel district and the international address for fashion and retail, but the reality didn’t necessarily live up to the name — a lot of it was ingrained in our collective memory.”
With California still in a deep recession, Chappell said a series of events demonstrated that Union Square was an undermanaged resource in search of an identity.
“At one point there was a proposal for electronic billboards on two sides of the Square, which escalated into a major policy debate,” he said. “That begged the whole question as to what type of district this was — was this the white glove, retail district or was this the entertainment/retail district?”
Around the same time, Chappell added, San Francisco was plagued by homelessness, graffiti and street trash, all problems which Union Square was unable to avoid.
The turning point occurred in 1995, when a group of local merchants got together and began the formation of a Business Improvement District (BID), according to Chappell, who noted that there were no BIDs in California at the time.
“The Mayor, together with the Museum of Modern Art, the American Institute of Architects, and a citizens group called San Francisco Beautiful, then decided to institute a design competition called San Francisco Pride,” he explained.
The competition for Union Square’s plaza, which was held in the summer of 1997, drew 1,100 inquiries and more than 300 entries, Chappell said, noting that the winning design has been selected and is slated to begin construction next winter.
In the meantime, Chappell said Union Square continues to evolve, especially along Post Street and Grant Avenue.
“There’s really been a changing of the guard, mainly an explosion of high-end, international boutiques, whereas in 1980 it was more local independents,” he said.
“I don’t think it’s as much as a comeback as it is an evolution of a historically very strong shopping district into one with an even stronger regional, national and international draw,” said Louis Meuner, executive vice president of Macy’s West and president of Union Square’s BID, which has helped spearhead the effort.
Macy’s Union Square, now completely remodeled and expanded, is considered the centerpiece of the revival. It is the most extensive renovation in the history of Macy’s West.
The project began in 1997 with the remodeling of the main building and the expansion into four selling floors of the former I. Magnin store. The company also replaced two inefficient properties on Geary Street with a new 237,000-square-foot building, which gave the store its first grand entry on Union Square and added 170,000 square feet of retail space.
Including the stand-alone Men’s Store across Stockton Street, Macy’s Union Square now comprises 700,000 square feet of retail space, making it one of the largest department stores in the world.
The project, which was completed in August, makes Union Square an even stronger draw than it already was, according to Beckie Canfield, senior vice president and director of stores for Macy’s West.
“There’s no question that over the last couple of years Union Square has become a real hot spot for all types of shopping experiences.”
That’s a stark contrast, Canfield added, to the early 1990s.
“After the big earthquake there was a tendency to not want to come downtown as often and to shop mostly in suburban stores,” she explained. “Back then we also didn’t have all of these new retailers, so there’s more reason to come downtown now.”
The addition of retailers such as Planet Hollywood, The Disney Store and Virgin Music has also made Union Square a more well-rounded shopping experience, she added.
“It’s a more diverse mix of retailers, it offers everything from restaurants, specialty stores and apparel to music,” she said. “In 1989 we didn’t have the diversity of retailers downtown like we have now, it was mostly local apparel stores and boutiques.”
To Meuner, executive vice president of Macy’s West, the recently completed renovation, which includes an all-glass, six-story facade, gives Macy’s an even greater presence on Union Square, as well as a significant improvement over the old store.
The original Macy buildings, parts of which were built in 1945, when R.H. Macy & Co. purchased an old-line San Francisco department store, were all very different architecturally, he explained.
“It’s really given us a front door on to Union Square,” he explained. “Rather than three quite ugly, small buildings that intertwined and were difficult to navigate, we now we have a good horizontal run through all of our buildings.”
Next to Macy’s, one of the more significant developments in Union Square was the opening of Levi’s first San Francisco store back in August.
The 24,000-square-foot, four-level flagship store, which is located on Post Street, is a new platform for Levi’s and is considerably larger than its mall stores, which average between 3,000 and 10,000 square feet.
Company officials had been searching for years for the right location, according to Janie Ligon, vice president of direct to consumer at Levi Strauss & Co.
“Levi Strauss can trace its roots to San Francisco, and for the past eight to 10 years we have been looking for the ideal location to put a store in the city,” she said. “Up until two years ago, however, we really hadn’t found what we thought was the right location.”
After keeping a close eye on developments in Union Square, Ligon said it was obvious that the area was the right choice.
“We wanted to be in the premier shopping area, both for regular residents and for visitors to the city, and there’s no question that Union Square is that place today.”
San Fransisco Project Update
Source: CB Richard Ellis, Terranomics Retail Services.Sony’s Metreon at Yerba Buena Gardens
The project, which made its debut in July, features 350,000 square feet of retail/entertainment, including a 15-screen cineplex and IMAX theater, Discovery Channel store, various forms of interactive play for children, interactive entertainment, live performance venues and restaurants.(Former) Emporium Building
This 425,000-square-foot former department store in Yerba Buena is temporarily the new home of Macy’s Furniture, which opened in February 1997 on the ground floor. Forest City Enterprises, Cleveland, has plans to build a $400 million project that will include a 370,000-square-foot Bloomingdale’s department store, as well as 850,000 square feet of retail, entertainment and cinemas on six floors. The project is scheduled for an August 2002 opening.Neiman Marcus
The upscale fashion store has purchased the adjacent 50,000-square-foot building at 125-129 Geary Street, enabling an expansion of its store by 25%. Construction is projected to be completed by 2003.Millennium Partners
The developer is building a mixed-use project in Yerba Buena that will include more than 150,000 square feet of retail, a 100,000-square-foot Reebok Fitness Center, 210 luxury apartments and a 285-room Four Seasons Hotel. | Current Issue March 2010 |