Castro Retail Debate Lands at City Hall

A debate over the changing retail landscape in San Francisco's gay neighborhood will land at City Hall Thursday when the city's planning commission takes up whether to approve three businesses considered to be formula retailers.

Castro gay bar owner Les Natali is seeking approval to open a Hamburger Mary's in the long vacant Patio Cafe space at 531 Castro Street. The restaurant chain was launched in San Francisco in 1972, although the South of Market location was shuttered in 2001.

A few doors down from Natali's property, Phil Jaber wants to relocate his 18th Street Philz coffeehouse into the storefront at 549 Castro Street. The location had been a shoe store, and most recently, the campaign headquarters for Assemblyman David Chiu (D-San Francisco).

And Soulcycle, the national chain of spin class fitness centers, would like to open its third San Francisco location at 400 Castro Street, the former bank building above the Castro Muni station that once housed jeans purveyor Diesel.

While Soulcycle has been widely welcomed by Castro residents and merchants, both Philz and Hamburger Mary's have drawn opponents. In Philz's case, the concern is seeing what once was a retail space be given over to another coffeehouse, while Hamburger Mary's has raised objections for being a formulaic restaurant. The commission did receive 668 emails in support of Hamburger Mary's, while Philz garnered four letters in support of the project from two neighborhood groups and two individuals.

Planning staff has recommended that all three of the businesses be approved, and it is expected that the planning commission will vote in their favor. Nonetheless, the hearing has brought to the fore concerns over the direction of where the Castro business scene is headed.

Some merchants object to seeing spaces that had been leased to stores being taken over by non-retail uses. In recent years three storefronts on the 400 and 500 blocks of Castro Street have given way to medical clinics, and a fourth is soon to be a hotdog stand.

Other retail spaces on 18th, 17th, and along Market Street have given way to coffeehouses, prompting growing complaints that the Castro is awash in cafes.

"This neighborhood is going to end up just being bars, banks, and baristas," said longtime Castro merchant Patrick Batt, who opposes Philz's relocation plans. "There isn't going to be a reason for people to come here to shop."

Batt owns the gay porn store Auto Erotica on 18th Street and is a co-owner of the Eureka Cafe on the 400 block of Castro Street, which opened earlier this year. The majority of the cafe's business comes from tourists and many kvetch about the lack of shops in the gayborhood, Batt said.

"The Castro has an international reputation, but when people come here they have no reason to stay," said Batt. "If you don't have cute little gay shops, they are not going to spend their money."

Other merchants, however, welcome the Castro's changing business lineup. Daniel Bergerac, president of the Castro Merchants business association, said the new retailers coming to the neighborhood are meeting a need.

"I truly feel retailing as we know it has dramatically changed with the advent of the Internet. What was standard brick and mortar retailing is no longer because of the Internet," said Bergerac, a co-owner of Mudpuppy's Tub and Scrub on the 500 block of Castro Street as well as a resident. "There has got to be business owners who have to step up and produce some great retail entertainment. Shops that people really want to go to."

Although he is personally opposed to Hamburger Mary's, mainly due to concerns that if it fails another chain restaurant will want to move in, Bergerac said he expects it will be approved. Having that space open again after years of seeing it vacant will have a significant impact on the Castro, he predicted, as will the openings of Philz and Soulcycle.

"Psychologically, to finally have that ghost ship filled with humans is going to be gigantic for the neighborhood," said Bergerac. "I think more people on the street means more opportunities there are for every business owner."

While the board of the Castro/Upper Market Community Benefit District voted to support all three of the businesses wanting to open on Castro Street, its executive director Andrea Aiello said the concerns voiced by Batt and others are valid points the neighborhood needs to address.

"It is a very important issue," said Aiello, noting that the CBD also hears from tourists to the Castro that there is a lack of things for them to do in the area.

"They are looking for cute boutiques to go shopping. They want some nice memorabilia from the Castro that they can bring home rather than a keychain or a mug or T-shirt at Walgreens," she said. "That is a challenge they have. Tourists do want to go shopping; there is not that much here."

The CBD is working with other Castro neighborhood groups to develop a retail strategy in hopes of improving the retail options in the gay business district for both visitors and residents. It has been surveying merchants and shoppers in the area - more than 850 people have filled out a questionnaire related to the retail strategy work so far - and expects to present the findings in the spring and a plan by July.

"If our goal is to generate interest in a lot of foot traffic, we need to think about what kinds of shops and institutions do that," said Aiello. "We need to examine ways to encourage a thriving neighborhood."

Gay District 8 Supervisor Scott Wiener, who represents the Castro, declined to comment specifically on the three businesses seeking permits as the planning commission's decisions could be appealed to the Board of Supervisors.

In general, Wiener said, "I am happy there are proposals to fill vacancies in the neighborhood."

In terms of their impact, Wiener said, "I do think it is important in going through the conditional use process to take the big picture into account. That is fair game."

As he surveys the Castro's retail scene, Wiener believes there is a healthy mix of shops, restaurants, and other businesses.

"New retail stores have opened in the neighborhood, and I am confident they will continue to do so. We also have a dramatically improved restaurant scene compared to when I moved into the neighborhood in 1997," he said. "If you look at the cafes in the Castro, they tend to be pretty full ... They all serve important purposes in the neighborhood and we see all three types of businesses opening in the Castro: cafes, restaurants and traditional retail."

People can take the Castro retail survey through December 12 at http://www.castroretail.com/.