24-hour Starbucks in Union Square mysteriously closes: 'I was shocked. It was always busy'

The closure of a Starbucks at 201 Powell St. in San Francisco's Union Square, surprised the neighborhood. The coffee shop served its last coffee on Jan. 20, 2019. The closure of a Starbucks at 201 Powell St. in San Francisco's Union Square, surprised the neighborhood. The coffee shop served its last coffee on Jan. 20, 2019. Photo: Amy Graff Photo: Amy Graff Image 1 of / 14 Caption Close 24-hour Starbucks in Union Square mysteriously closes: 'I was shocked. It was always busy' 1 / 14 Back to Gallery

The closure of a Starbucks on Union Square, what may be the busiest Frappuccino outpost in San Francisco, has stunned the neighborhood.

The location at 201 Powell St. was frequented by locals and tourists before serving its last coffee on Jan. 20. There is no shortage of other Starbucks locations in the city, but the closure of this high-traffic location came as a surprise to some.

"I ordered coffee there every day," says Jonathan Chavez, who works at a hotel a block away. "When I came into work and it was closed, I was shocked. It was always busy."

"It's pretty weird to see that corner not have Starbucks," says Zaid Farooqui, a daily Starbucks customer who lives downtown.

This particular Starbucks is an especially big loss for some because of its central location and its 24 -hour service. (Note: the Laurel Village location is open 24 hours.

SFGATE spoke with a handful of regular customers of the former Starbucks location and they all said baristas told them days before the closure the rent was raised.

Starbucks chose to not comment on the reason for closing and shared in a statement: "This store is special, to our customers and our partners, and we remain committed to continuing serving the community, offering a warm and welcoming environment for people to connect. Customers in the area will be able to visit our nearby store on Geary & Taylor (4 minute walk from the store at 201 Powell)."

SFGATE also reached out to the leasing agent for 201 Powell, who declined to comment.

ALSO: North Beach commercial vacancy rate doubles in 3 years

The shutdown comes at a time when several storefronts are empty along the Powell Street corridor, a stretch of the city that 30,000-plus pedestrians walk along every day, according to the Union Square Business Improvement District.

Blondies Pizza closed at 63 Powell in spring 2016 and the space remains empty, while the former location of fashion retailer BCBG at 331 Powell has been vacant since winter 2017.

The same week Starbucks closed, the Bellini Cafe at 235 Powell stopped serving burgers and pizza.

"It was always busy," says Chavez. "I could get a slice and a drink for $4."

Jon Handlery, who owns several buildings in the area including the space formerly occupied by Bellini, didn't want to comment on the cafe's closure, but he said vacancies are a city-wide problem.

"It's not happening in just one area," says Handlery. It's all over town. You look at Sutter, which used to be a vibrant retail area, but what happened there? North Beach...what's going on there? There has to be a variety of things to contributing to this."

Handlrey believes one contributing factor might be a reduction in Bay Area residents living outside San Francisco who used to come into the city for a show, to eat at a restaurant and to shop. The city's issue with people living on the streets and traffic have contributed to this decline, he says.

"Now it's a hassle to get into the center of the city with the changes in streets, the reductions in lanes," he says. "And the people who get off at the Powell Street BART station...and the homeless issue."

Supervisor Aaron Peskin says commercial vacancies are a problem everywhere as people turn toward delivery services and online shopping for everything from coffee to groceries to a new pair of shoes.

"We are all experiencing nationally and internationally the impacts of the society of convenience," Peskin says. "People with means have stuff delivered to their doors. And that's a new economy. That economy has put people to work and it has also displaced other people from work. It has led to a number of ground-floor retail vacancies in this city and other cities."

He adds that landlords need to shift their rents in accordance with the changing economy. "I think rents are stabilizing and landlords need to realize that," says Peskin.

To address this issue of landlords keeping their properties vacant until they can extract higher rents from potential tenants, Peskin has introduced legislation to tax landlords with commercial properties in Neighborhood Commercial Districts — areas where stores and services are clustered -- that are vacant for more than six months.

MORE: Vacancy glut in SF could spur tax on empty storefronts

Peskin says that as far as neighborhoods go in San Francisco, Union Square has a "remarkably healthy vacancy rate" and the number of vacancies is smaller than in other neighborhood commercial districts.

Karin Flood, executive director of the Union Square Business Improvement District, concurs and thinks the vacancies will fill with new retails and restaurants quickly.

"The city is getting ready to invest a lot into that corridor to improve the street scapes there," Flood says. "At the moment, the situation doesn't look good but I don't expect it to be that way for long."

Note: This story was updated at 11:30 a.m. on January 29, 2019.