Gas stations help spark S.F.’S high-octane growth
Low-margin businesses are giving way to housing and retail
San Francisco’s neighborhood gas stations used to service cars, but now they are fueling the city’s housing boom.
One by one, from the Rincon Hill 76 by the entrance to the Bay Bridge to the busy Tower CarWash and fuel station where South Van Ness merges with Mission Street, housing developers are pouncing on any chance to replace gas pumps with penthouses. Since the economic recovery started in 2010, housing developers have initiated projects that would replace 23 gas stations across the city, including five on four blocks of Upper Market Street, four on Valencia Street, two on Sixth Street and two on South Van Ness.
Along with 13 sites of former gas stations that have already been developed or are under construction, by 2017 the city will have 40 percent fewer service stations than existed a decade earlier, according to city records.
So far the trend is not causing much hand-wringing. Gas stations, with their fumes, traffic and curb cuts, are rarely beloved neighborhood institutions. Underground gas tanks are notorious for contaminating soil, although they are much cleaner than they used to be. In the new urbanist world of separated bike lanes and transit-oriented development, the lowly seller of gasoline is persona non grata.
“Replacing gas stations with housing and retail makes sense,” said Supervisor Scott Wiener, who represents Upper Market Street. “For many years we had too many gas stations, for sure. In the Castro
we had four. They were taking up a lot of land.”
But the city still needs some gas stations, Wiener said. There are about 350,000 registered cars in the city, and gas stations, along with parking lots, provide parking for carsharing programs like City CarShare and Zipcar.
“If you have too few gas stations, it creates congestion issues with people crowding into a small number of stations,” he said.
‘Cars are ... less useful’
At the Tower Car Wash at 1601 Mission St., residential builder Trumark Urban is proposing about 200 units on a triangular site directly across from the Planning Department offices, according to an application filed last month with the city. Trumark Managing Director Arden Hearing said the site is smack in the middle of a neighborhood that has “become the center of the universe” as central Market Street bursts with new tech jobs and housing.
“It is no secret that cars are becoming less useful in San Francisco. We are overdue for such a tipping point,” Hearing said. “We need gas stations less and car washes less.”
In addition to the huge profits that can be reaped from $1.5 million condos or $4,500-amonth apartments, gas stations are closing down because they are barely profitable, according to Sam Hariz, president of the Service Station Franchise Association. Two decades ago, gas stations would buy a gallon of gas for $1.20 and sell it for $1.28. Now a gallon the station gets wholesale for $4 sells for $4.06. Meanwhile, the cost of real estate and payroll has dramatically increased.
“Obviously you are going to get a much higher return on investment by selling it to a developer for housing or retail,” Hariz said. “It is to the point where when you buy a gas station you are buying a hard-working job where you work long hours and the oil company or the franchisor squeezes the hell out of you.”
‘Margins are so tight’
Developer Brian Spiers, who recently completed construction on a 115-condo project called Linea at 1998 Market St., a former 76 station, owned the gas station for three years while he was winning approvals for the housing.
“I owned it for longer than I wanted to,” he said. “I found out pretty quickly that you don’t make any money selling gas. The margins are so tight. No one wanted to come in and operate it. No wonder these guys want to sell.”
Given the land values in San Francisco, Spiers suggested gas pumps should be placed at the side of roads or in parking garages as they are in Europe. “The whole gas station experience needs to go away in the urban environment,” he said.
City zoning generally allows gas stations on busy transit corridors like Geary Boulevard, Market Street, Divisadero Street, Van Ness Avenue and 16th Street, but not in more residential areas on the city’s west side. But as the city’s busiest corridors are redesigned to accommodate bikes, transit-oriented housing and more intensive public transportation, gas stations don’t fit into the mix very well. Instead, the city should look at concentrating service stations in areas with more drivers, according to Livable City Director Tom Radulovich.
“There are relatively few places on the west side where the zoning would allow a new gas station,” he said. “Part of me thinks they should be permitted where people who drive live. It’s something the city should think about — if not on Valencia Street, then where? We have not had that conversation. The day may come where people have to drive to San Mateo County to get gas.”
Ideal sites for building
Part of the appeal of developing gas stations is that often they are ideal infill sites, according to Chris Foley, a partner with Polaris Pacific, who has sold several gas station sites to developers. “They are on the corner. They are usually rectangular or square. They are easy to build on. If you are a resident in the neighborhood, do you want a gas station, or do you want housing?”
Until the 1980s, most tanks storing petroleum were made of a single layer of steel, making them susceptible to corrosion and leaks. Over the past 20 years, environmental regulations have required owners to get rid of the old tanks and clean up whatever leakage had occurred, so gas stations in the city don't require a lot of environmental remediation.
“The gas station sites are no longer the money sinks they used to be,” said architect Toby Levy, who is working on a 125-unit project that would replace a gas station, Starbucks and Burger King at 1298 Howard St. “It’s a lot easier to get a handle on the toxic clean up. If you are building in SoMa, the toxins are just as bad if it was a gas station or something else.”
While the housing construction bonanza is creating thousands of good jobs, the disappearance of gas stations is worrisome for those who still work in the business. At the last functioning gas station on Valencia Street, which is slated to be replaced with 35 units, the clerk said he goes to work every day “waiting to be kicked out.”
“They say they are going to close in six months or a year. Where are we going to go? Who is going to hire me at my age?” said the clerk, who asked not to be named because he didn’t have permission to speak.
Not affordable for all
Others question whether the housing that is going to be built is really what the city needs. The Tower Car Wash and gas station has contracts with the Port of San Francisco and the San Francisco Police Department. On a recent morning, port workers Manny Pacheco and Mauricio Rodriguez were getting their city cars washed. They bemoaned the fact that gas stations are disappearing and getting replaced with housing that is out of reach for the folks they grew up with in the city.
“Condos are popping up in the city like pieces of toast,” said Pacheco, a senior clerk. “They claim it’s going to be affordable. I think it’s affordable to brain surgeons or lawyers — not your average Joe. If you’re an average Joe, good luck finding a garage to sleep in.”