6 Reasons Mid-Market Is S.F.'s New Hot Spot
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We've already told you Mid-Market is undergoing a massive transformation. Bisnow gathered a group of S.F. elite to tell us what separates the area from the rest of the city.
1. Unconventional Projects
Tidewater Capital managing principal Craig Young told attendees of Bisnow's Future of Mid-Market event at Hotel Nikko on Friday that his firm jumped on the unique opportunity to turn 1028 Market into a bustling food hall while the site goes through entitlements for 186 rental units. The shuttered billiards hall, vacant for seven years, was a source of negative energy for the neighborhood, but the demand for food options was definitely there (you have to walk six blocks to get a decent salad or sandwich), and companies like Zendesk were moving across the street, he says. It may be unconventional to invest in a building that will be torn down in a few years, but Craig says the benefits of creating a gathering place were worthwhile. Here's a look at more projects that will transform Mid-Market.
2. Affordability Issues
Tenderloin Neighborhood Development executive director Donald Falk says building more is not enough when it comes to dealing with S.F.'s affordable housing crisis. He says if we don't find a way to maintain a 30% affordable balance, in 30 years we will be horrified by a city occupied exclusively by the rich. It's important to make investments now to address displacement later on.
3. Offshore Money
HFF associate director Adam Simon says just a few years ago you never would have heard "foreign capital" and "Mid-Market" in the same sentence. That's changed big time, he says, citing last year's trade of 1019 Market to Deutsche Bank. He revealed his team recently got the listing to sell 1390 Market.
4. Less Pressure
Amy Cohen, the City's point person from the Office of Economic and Workforce Development (OEWD), says the neighborhood isn't experiencing the same challenges as the rest of S.F. (no-fault evictions have stayed the same but are up 2.5 times across the rest of the city). Since 2011, 20 buildings in the neighborhood that were vacant are now full. The big challenge during the boom the past two years, she says, is how to keep the momentum of Mid-Market development going.
5. Market Timing
Essel Environmental Engineering & Consulting president Nik Lahiri, who moderated, asked Long Market Property Partners principal Daniel Goldberg what the landscape of Mid-Market looked like before it was a cool place to be. In 2001, Dan says, all foot traffic stopped at 5th and everyone kept calling it the next neighborhood to come (but it wasn't coming). Fast forward to 2013 when he bought 995 Market, and Dan admits he was "late to the party." The Warfield had already traded, Twitter was occupying, and the vision was already there.
6. Creative Ownership
Don thinks the answer to the affordability crisis is nonprofit-owned housing—but it's a long answer. It's not going to provide relief tomorrow, he says, but it could protect tenants from the displacement we are seeing in the Mission and SoMa. There are groups like the AIDS Foundation, which has a long-term lease at 1035 Market and are positioned to maintain their home, whereas others with shorter-term leases are getting priced out of the market.