North Peninsula a draw for S.F. firms 

Like many residents in the smaller cities that dot the Peninsula, mid- to small-size businesses are increasingly relocating to cities like Brisbane or South San Francisco to escape a real estate environment they can’t keep pace with.

Businesses note a lack of functional warehouse space, poor tax incentives and more expensive rates as the primary causes of their moving south, all reasons echoed by commercial real estate experts and business officials in The City.

The market for small businesses is "challenging" and "ironic," experts said, because there is high demand to fill available spaces, but at the same time there is an "exodus" of businesses out of The City because they can ill afford to pay for such perks as paid sick leave, which kicks today, and required health care.

HMR Group, a computer equipment recycling company, just took the keys on more than 60,000 square feet of space in Brisbane, moving 50 employees south to take advantage of the continually growing biotechnology industry close by, said John Bekiaris, the company’s CEO.

HMR will maintain its headquarters in The City but the limited availability of warehouse space in its area, south of the growing Mission Bay campus, caused it to look elsewhere for its operations.

"There’s not many large, old warehouses in the area," said Bekiaris, who said the company otherwise enjoyed comparatively cheaper rent, roughly 35 cents per square foot, in The City.

Scott Mason, the CFO for HC&M Commercial Properties, Inc., described The City as a "somewhat unfriendly business climate especially for the mid- to small-business owner," due to limited industrial space, higher prices and poor tax incentives.

"The bottom line is that The City really doesn’t

do anything positive from a tax incentive to keep the small-business owners in The City," Mason said.

The limited space and high demand is keeping prices high, he added, noting an average cost difference between The City and others is 10 cents, which can add up to thousands of dollars during a year.

Light industrial and manufacturing space has grown increasingly unavailable as The City has grown and developed — the dot-com era making a push on that available space, driving costs up and availability down, said Carol Piasente, spokeswoman for San Francisco Chamber of Commerce.

The consequences are The City losing the time-honored small businesses that grow there, such as McCune Audio/Visual/Lighting, a 75-year-old business that left its location on Cesar Chavez Street four years ago for South San Francisco.

"The additional cost of fuel, per se, is easily offset by the tax and insurance savings," said Peter McCune, president of the audience communications company. "It seems as if (San Francisco) is always trying to find another way to tax you."

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