Photograph by Morgane Byloos

Photograph by Morgane Byloos

Potrero Bicycle Works has left the hill to set up shop in the Mission.

March 2014

Sky-High Rents Forcing Out Neighborhood Businesses


Potrero Hill and Dogpatch, not so long ago sketchy neighborhoods populated by artists and craftspeople looking for lower rents and an escape from the bustling city, are becoming gentrified. Lower wage workers are being out-priced by a wave of high technology and health professionals. Rents are increasing dramatically, leading to a steady outward migration of sometimes long-term residents and businesses.

According to Keith Goldstein, Potrero Dogpatch Merchants Association president, there’s a “propensity for tech companies to relocate to this neighborhood.” He attributed the trend to the neighborhoods’ proximity to Caltrain, a prized transportation link to Silicon Valley, but also because the area has a lot of industrial and commercial space that’s been underutilized.

The Fei Tian Academy of the Arts California is being forced out of its 15th Street space due to rising rents. According to Academy trustee and co-founder Sherry Zhang, their lease rate doubled in just four years, from $1.5 per square foot to more than $3, forcing the nonprofit art school to relocate. “We found a new location to move to in another part of the City,” said Zhang. “We love the Potrero Hill neighborhood, but unfortunately we will have to move away. We put in lots of effort to make our current location really beautiful. We are sad that we have to leave.”

Susannah Bruder, owner of Yogasita, had to close her Mariposa Street studio last year due to a steep rent increase. The property owner proposed a month-to-month lease with a 125-percent rate hike. Bruder managed to stay in the space even with the increase for a few months, but soon realized she didn’t want to be under so much pressure. The last straw was when her dog Sita, who attended all of her yoga classes, died last fall. In the midst of her grieving Bruder decided that she didn’t want to have to teach classes with dozens of people just to be able to make rent. She prefers smaller groups or one-on-one instruction.

After 11 years in her Hill studio and almost 20 years of teaching, Bruder is now holding classes at her students’ homes, as well as pop-up sessions in different spaces. She recently found an opportunity to open up a studio. “Yogasita will be reincarnated in about one year after a slight remodel of the building called the Hair Fair on 20th Street,” she said.

Once small businesses are gone, it may be hard to get them to come back. Sam Kroyer, co-owner of Potrero Bicycle Works, formerly Roll, recently closed his two-year-old bicycle repair shop at the corner of 16th and Rhode Island streets because he couldn’t afford the rent: $6,400 for roughly 1,600 square feet. Kroyer, who doesn’t want to give in to the “cookie-cutter style” that bike shops usually have, and doesn’t want to start selling bicycles, said he realized a smaller, less expensive space might be adequate for his needs. He packed up his tools, stored them in his Outer Mission home garage and started working out of a new space near 22nd and Mission streets. It’s only 100 square feet, with 11-foot ceilings, requiring Kroyer to tightly manage his operations.

According to District 10 Supervisor Malia Cohen, she and her colleagues are working to retain and support small businesses. “The Eastern Neighborhoods Production, Distribution, Repair — PDR — legislation that I introduced does a number of things to retain and support the growth of small businesses,” Cohen said. “Including allowing manufacturers to pool their resources to share retail spaces which are central to business. In some areas, this legislation will allow self-storage uses to be reconstructed if they also deliver the equivalent of new manufacturing space on the same site.”

Cohen said that most cities in the country are trying to get rid of their last bits of industrial spaces, but San Francisco isn’t. “We recognize that if we are going to thrive as a city we need to support and maintain a diverse economy, and the PDR sector is vital to this.” She also emphasized the importance of having those businesses around to create jobs. “We simply cannot look at our city’s affordability crisis without looking at ways to support living-wage jobs for a diverse population of residents.”

In addition to threats to neighborhood businesses, Goldstein, who has been a Hill resident and business owner for 40 years, said community members are concerned about the lack of open space, growing traffic and poor access to public transit. But while some enterprises are struggling to stay in the area, others welcome the new wave of potential customers. Goldstein’s building waterproofing and restoration business is prospering thanks to the healthy economic climate. “I’m reluctant to demonize the tech companies and hold them responsible for everything bad that’s happened.”

Other business owners, like Bruder, are just hoping that the commercial rental market will get saturated so they can once again thrive in their neighborhood.

Subscribe to The Potrero View

All rights reserved. Copyright © 2015 The Potrero View.

Content on this site may not be archived, retransmitted, saved in a database, or used for any commercial purpose without the express written permission of The Potrero View or its Publishers.