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The Malling of San Francisco

| Written by ILSR Admin | No Comments | Updated on Jul 10, 2012 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/malling-san-francisco/

San Francisco Bay Guardian, July 10, 2012

Shopping malls filled with national chain stores and restaurants are in many respects the antithesis of San Francisco. They’re the bane of any metropolis that strives to be unique and authentic. And those just happen to be qualities that make tourism this city’s number one industry.  The logic of modern capitalism, and its relentless growth into new markets, has already placed a Target or a Walmart, and a Nordstrom, Macy’s, Ross, or a JCPenney — along with a bevy of Starbucks, Applebee’s, Jamba Juice, and McDonald’s and myriad other formulaic corporate eateries — in just about every town in the country.

Do people really need them here, too? And in a city renowned worldwide for its scenic beauty and temperate (albeit sometimes foggy) climate, do people want to shop in the enclosed, climate-controlled malls popularized in the small or suburban towns that many residents came here to escape?

San Francisco isn’t alone in allowing national chains to increasingly dominate commercial spaces. In fact, Stacy Mitchell, a researcher with the Institute for Local Self-Reliance, said that until recently San Francisco was one of the best big US cities in controlling the proliferation of chain stores.

But the city has lost ground since its anti-chain high water mark in 2007, when voters approved Proposition G, which expanded the controls on formula retail outlets — generally requiring them to get a conditional use permit and go through public hearings — that the Board of Supervisors had approved in 2004.

Those controls are only as good as the political will to reject a permit application, and that doesn’t happen very often. A memo prepared last July for the Planning Commission — entitled “Informational Presentation on the Status of Formula Retail Controls” — found that of the 31 formula retails applications the city received since 2007, just three were rejected by the commission, six were withdrawn, and 22 were approved.

It’s gotten even worse since then, as the two Targets and other chains have been courted and embraced by Mayor’s Lee’s administration, whose key representatives didn’t respond to Guardian interview requests by press time.

Mitchell said it’s not nearly as bad in San Francisco as it is in Chicago, New York City, New Orleans, and other iconic US cities whose commercial spaces have been flooded with chains since the recession began.

“It’s nothing compared to the no-holds-barred stuff going on in New York City right now,” Mitchell said. “Walking down Broadway now is like a repeating loop of the stores you just saw further up the street.”

It isn’t that these cities are actively courting the national chains in most cases. It’s just that in the absence of strong local controls, developers and large commercial landlords just prefer to deal with chains, for a variety of reasons.

“If you’re just going with the flow of what developers are doing,” she said, “you always end up with national chains.”

And that’s what San Francisco has started to do.

Mitchell said there are two main ways in which malls favor national chains over local businesses. In addition to the relationship between mall brokers and national chains, malls are often built with financing from financial institutions that require certain repayment guarantees.

“What they want to see are credit-worthy clients signed onto those places, and that means national chains with a credit rating from Standard & Poors,” Mitchell said, noting how that “automatically locks out” most local businesses.

Cornell also noted that national chains have already figured out how to maximize their efficiency, which keeps their costs down even though that often comes in the form of fewer employees with lower pay — and less reliance on local suppliers, accountants, attorneys, and other professionals — which ends up hurting the local economy. In fact, big chains suck money out of the city and back to corporate headquarters.

“All those people are making money and spending money here, so you have to look at the full circle,” Cornell said.

Mitchell said there are often simple solutions to the problem. For example, she said that city officials in Austin, Texas recently required the developer of a large shopping mall to set aside a certain percentage of the units for locally owned businesses.

So rather than hiring a national broker to find tenants, the developer hired a local broker to contact successful independent businesses in the area who might be interested in expanding, and the project ended up greatly exceeding the city’s minimum requirements.

Mechanisms like that, or like the formula retail controls pioneered in San Francisco, give her some hope. But she said, “Whether the counter-trends will be enough to counter the dominant trend, I don’t know.”

“The recession has created a climate of desperation where cities are more easily swayed by the jobs argument,” Mitchell said, noting the falsity of those arguments by pointing to studies showing that the arrival of chain stores in cities usually creates a net loss in employment. Finally, supporters of chain stores say the cash-strapped city needs the property and sales tax revenue “Because they say they’ll produce a lot sales tax revenue, they’re going to get away with all kinds of shit,” Cornell said, arguing that shouldn’t justify city policies that favor big corporations, such as tax breaks and publicly financed infrastructure. “I certainly don’t think [city officials] should be giving them any advantages.” There are few simple solutions to the complex and interconnected problems that result from the malling of San Francisco and other cities. It’s really a question of balance — and the answer of whether San Francisco can regain its balance has yet to be answered. “Given the mayor’s approach to economic development, it’s inevitable that we’ll have more coming into the city,” Sup. Mar said. “But the ’50s car culture, and the model of malls that came in the ’60s, don’t build communities or strong neighborhoods.”

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