Staff recommends case-by-case review for Union Square upper-floor retail conversions

San Francisco planning staff and the Mayor’s Office of Economic and Workforce Development presented an informational study on March 16 that examined whether Union Square’s upper‑floor retail should be allowed to convert to office uses.

OEWD and planning staff told the Planning Commission that national retail trends—growth in online shopping, smaller brick‑and‑mortar footprints, and pressure on large department stores—are reshaping demand. Union Square still generates a large share of the city’s consumer sales tax revenue, but staff showed a slight dip in ground‑floor vacancy and noted a rise in upper‑level vacancies, with patterns that could damage a block if vacancies cluster.

Staff recommended against an across‑the‑board, bright‑line rule (for example, forbidding conversions above the second floor). Instead, they advised evaluating proposed conversions against a list of factors: whether the proposed use preserves the district’s primary retail function; the building’s location and floor‑plate size; vacancy clustering on the block; short‑term construction impacts (for example, Central Subway work); and the availability of alternative retail‑compatible tenants (small‑footprint retail, arts or public‑serving uses).

OEWD analysts also noted that retailers today more frequently mix in‑store and online inventories and seek smaller, high‑turnover floor plates. Planning staff said some upper floors are viable for non‑retail, public‑serving uses such as arts, design studios or small professional firms that complement street‑level retail without competing with it, but cautioned that such uses typically cannot pay prime street‑level retail rents.

Several property owners and community stakeholders testified that the market is changing and urged the Commission to give staff more tools and to consider targeted pilot policies. Commissioners asked staff to continue the work and to convene a small working group to turn the report’s recommendations into implementable guidance for conditional‑use review.

Why it matters: The Union Square district accounts for a disproportionate share of San Francisco's sales tax receipts and foot traffic; how planning regulates conversions affects both the street-level retail ecosystem and property values.

What’s next: Staff will reconvene with stakeholders and commissioners to draft case‑by‑case review guidance; commissioners suggested a follow‑up working group and more detailed analyses, including possible comparisons to other cities that have managed upper‑floor conversions.