San Francisco fire a blow to emerging neighborhood

San Francisco firefighters battle a five alarm fire in the Mission Bay area of San Francisco, Calif. on Tuesday March 11, 2014. San Francisco firefighters battle a five alarm fire in the Mission Bay area of San Francisco, Calif. on Tuesday March 11, 2014. Photo: Michael Macor, The Chronicle Photo: Michael Macor, The Chronicle Image 1 of / 9 Caption Close San Francisco fire a blow to emerging neighborhood 1 / 9 Back to Gallery

San Francisco -- The fire that erupted Tuesday afternoon was a blow not just to the 172-unit apartment building under construction, but the emerging neighborhood of Mission Bay around it.

It's an area east of Interstate 280 and southwest of AT&T Park that for decades was filled with rail yards serving the city's waterfront. In the 1990s it became a redevelopment district, and the first parks and buildings opened about a decade ago.

Since then, the blocks closest to the ballpark have filled in with residential buildings. On the south end of the district, the UCSF-Mission Bay campus along Third Street covers 40 acres with a variety of educational and community structures. A UCSF hospital is taking shape, as is the future headquarters of the San Francisco Police Department.

But the blocks in between remained empty until the city's tight housing market prompted developers to start projects that for years had stalled. That's where Tuesday's fire broke out - in the first half of a 360-unit apartment complex being developed by BRE Properties on the west side of Fourth Street, two short blocks south of Mission Creek.

The San Francisco-based developer purchased two blocks totaling 3.7 acres in 2011 for $41 million. When construction began last year on the 1.8-acre block that burned Tuesday, company officials put the estimated total development cost at $227 million. At least four other residential projects are at various stages of construction within a stone's throw of the BRE site, together containing nearly 900 units.

Beyond the damage to the project dubbed MB360, there's the damage to the retail district planned along Fourth Street.

The ground floor of every residential building there is reserved for retail space. The idea is that the strip will become the commercial heart of the neighborhood - the 21st century equivalent to Chestnut Street in the Marina.

Even though other residential buildings did not sustain damage in Tuesday's fire, the presence of a burned-out block is bound to slow Fourth Street's emergence as a destination.

"We were finally getting the critical mass to support shops and restaurants," said John Rahaim, the city's planning director. "In the long run, it will be built, but this will delay things."

There's another impact, this one citywide.

"There's a huge need for housing right now," Rahaim said. "Losing these units at this time is a real concern."