Dining and retail begin to stir at last in Mission Bay

The “coming soon” sign announcing the imminent arrival of the Ethiopian restaurant House of Tadu was being hung in the window several weeks ago when a small crowd gathered outside the storefront at 1120 Fourth St. in Mission Bay.

“When we came outside to look at the sign, there were five or six people watching us on the sidewalk,” said Nani Segaye, co-owner of the restaurant. “They said they couldn’t believe that we were coming. They were very excited. That made me happy.”

Mission Bay is a neighborhood that has exceeded expectations in many ways — in just 12 years it has become home to dozens of life-science companies, a new $1.5 billion hospital, acres of new green space, thousands of new housing units and the future Warriors arena. So it is telling that a flimsy cardboard sign announcing a new restaurant should be a cause of celebration. For years dining and retail have been been the neighborhood’s weak spots, with dust gathering in the empty ground floors of buildings even as the apartments upstairs fill with residents.

But slowly — some residents would say far too slowly — businesses are beginning to take a chance on Mission Bay.

This is especially evident on the 1100 block of Fourth Street, where House of Tadu, which plans to open in early August, is one of five businesses that have signed leases on the ground floor of an affordable apartment complex owned by Mercy Housing. Next door will be Casey’s Pizza, the first brick-and-mortar location of a popular food truck. Other businesses that have already opened on the block include Reveille Coffee, which has fast become a neighborhood gathering spot; Mizu Spa, a nail and massage spot; and Back to the Picture, a frame store.

And more are coming. One Mission Bay, the 350-unit condominium development opening later this year on Channel Street between Third and Fourth streets, has signed a lease for 3,600 square feet with Wine Merchant, the group that owns Ferry Plaza Wine Merchant in the Ferry Building and Oxbow Wine and Cheese Merchant in downtown Napa. Next door, fitness center LagreeFit 415, will open a 1,700-square-foot facility.

Terry Wachsner, a principal with the CIM Group, which is developing One Mission Bay, said the two businesses would debut in April, four months after the first residents move in. The condos are 65 percent sold. Eventually the building’s 16,000 square feet of retail will also include several more restaurants and possibly a bank.

“As more retail opens you are going to see a sense of community evolve,” Wachsner said. “The new condos, the Warriors arena — all these things are adding to the kind of anticipation and excitement that will help drive the retail.”

The housing in Mission Bay has gone up faster than was anticipated. So far 5,149 housing units have been competed, with another 497 set to be delivered by the end of the year. Another 800 units of affordable housing are in the pipeline.

But many buildings along Fourth Street, which was envisioned as a pedestrian-friendly row of housing complexes above retail, are still struggling to attract tenants. Most of the spaces on the east side of the street are empty, with the exception of Market Hall, a restaurant and upscale grocery store at 1101 Fourth St., and Bimma Loft at 1245 Fourth St., a furniture store that was the first retailer to move onto that stretch three years ago. A UPS store is slated to open at 1201 Fourth St.

Bimma Loft owner Pierre Leduc said the widespread problems brick-and-mortar retailers are facing everywhere — changing shopping habits and inability to compete with cheaper online outlets — have been exacerbated by the sluggish arrival of other retailers along Fourth Street.

“It’s building up very slowly — not nearly as fast as I had hoped when I came here,” he said. “I am suffering — but still standing. But I guess everyone in retail is suffering right now.”

The question of why Mercy Housing has been so successful leasing its retail while other buildings across the street sit empty probably comes down to cost. While none of the brokers who lease space in the area were willing to reveal leasing rates, several said nonprofit Mercy is offering space at significantly lower rates than the market-rate apartment buildings nearby.

Nance Conover, who handles leasing for Mercy Housing, said she beats the bushes for prospective tenants. She has reached out to clothing stores, the Castro district hardware/household-goods retailer Cliff’s Variety, and operators of affordable corner stores. Conover said she has tried to lure other ethnic restaurants — Vietnamese, Chinese, Indian — and a place families could go for fish and chips. The building has one more available space — 3,400 square feet on the northwest corner of Channel and Fourth.

“We do a lot of pavement pounding, a lot of cold calling,” Conover said. “We tried and couldn’t attract a clothing store. No toy store or gift shop. I think it will take a couple of more years. The neighborhood is not quite there yet.”

Reveille Coffee owner Chris Newbury opened in February 2016 and was immediately busy. “Nobody around here was doing what we do in terms of food and beverage,” he said. “The neighborhood was incredibly receptive and really seemed to want a local cafe they could call their own.”

Matt Springer, who has lived in the neighborhood since 2007, said the Mission Bay retail scene is somewhat limited by its rigid plan of big boxy blocks of housing to the north of Mission Bay Boulevard and big boxy blocks of office and life-science space to the south. He said it’s unfortunate that the place he considers the most organic and lively gathering spot in Mission Bay — the Spark Social SF food truck court on Mission Bay Boulevard — is temporary. It is to become park space.

“I run into neighbors every time I go there,” he said. “It’s where people bring their dogs, their kids. Unfortunately, it’s going away.”

credit: SF Chronicle