Land Use

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If You Build It, They Will Come

New Development Opportunity: For the First Time, New Office, Retail and Self-Storage May Occupy Some PDR (Industrial) Lots in San Francisco When Creating New PDR Space on Same Lot

May 15, 2014

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Just six years after reserving large areas of the City for light industrial uses known as Production, Distribution and Repair (PDR) uses, the City has realized that merely "land banking" lots through rezonings to restrict them to industrial-only use does not result in the building of new industrial structures. Now, the City seems to have adopted the “If you build it, they will come” philosophy. Since the lower rents that PDR users can afford has not made possible the creation of new PDR space, the City has just enacted a new law (with a sunset date in three years) that aims to incentivize the construction and conversion of buildings to PDR use by allowing more profitable uses such as office and self-storage to coexist with PDR uses on the same lot.

The legislation would allow these more profitable uses to be approved through a conditional use permit approval process. Despite the findings of a study commissioned by the Planning Department that creating new structures for PDR, which would be financially feasible to build, would allow no more than 20% PDR use, the legislation requires that 33% of the net new space be devoted to PDR space. The remaining two thirds of total gross floor area may be allocated to office use, and/or institutional uses such as assembly, social services, retail, child care, residential care, and colleges.

To qualify, a parcel must be two-thirds vacant, be at least 20,000 square feet in size and be located in certain PDR districts north of 20th Street. The project sponsor must develop a PDR Business Plan indicating as to how he or she will encourage PDR users to rent the space; and there must be submission of an Annual Report on the implementation of this Plan.

The legislation would also allow self-storage facilities to be relocated on lots where they already exist, and this may facilitate PDR construction of the new uses listed above. The City has nearly zoned them out of existence because of their inefficient use of land and generation of so few jobs, yet with new dwellings being built with so little storage, the need is great. The legislation also allows one to take an existing self-storage facility in certain PDR districts and rebuild it elsewhere on a lot (whether it is a non-conforming use or not), as long as the property will contain PDR space in an amount equal to the lot size. There are a number of these lots near freeway exits and in SOMA and the Central Waterfront and some in the Mission. The idea is that sites with self-storage are unlikely to ever see PDR uses constructed without such a cross-subsidy. The new PDR space can be in a new structure or in an existing structure or an addition, but must pass the “smell test” of being real PDR space. In addition, multiple PDR users in a single building can share an accessory retail space, allowing a larger retail presence than any single PDR user could have.

For more information, please contact:

M. Brett Gladstone

415-995-5065 Direct Phone
415-995-3517 Fax

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