c.2013 New York Times News Service

c.2013 New York Times News Service

SAN FRANCISCO — The middle stretch of Market Street here has befuddled mayors, investors and entrepreneurs for decades.

Studded with check-cashing joints, strip clubs and dollar stores, the seven-block strip known as the Mid-Market had resisted cleanup efforts and resolutely remained the same: a seedy place to visit day or night. Even the area’s community groups said they were fearful.

Mid-Market is home to some of the highest vacancy rates in the city for office or retail, despite its proximity to City Hall, which is a few blocks away.

So it seemed implausible that a young company, heralded as one of the technology industry’s next big things, would want to make its headquarters in Mid-Market. But in April 2011, that young company, Twitter, dispelled rumors that it was leaving San Francisco for a nearby city suburb and instead announced it was relocating to Mid-Market. In June 2012, it moved in.

Now 15 other companies, like Spotify, Square and Yammer, emboldened by Twitter’s move and a city tax incentive that largely makes them exempt from city payroll taxes if they relocate to the Mid-Market, have committed to take 1.3 million square feet in the Mid-Market, which the city has renamed Central Market. Apartment towers with 5,500 units are in the works, and arts groups, chefs, retailers and even a venture capitalist firm have taken up residence.

“You had a once vacant and blighted area that is now a gravitational center for some of the most innovative companies in the world,” said Todd Rufo, director of the San Francisco Office of Economic and Workforce Development.

Not to be outdone, the rest of San Francisco is in the middle of an impressive building boom.

In 2013, San Francisco became the second most expensive city in the country, behind New York, in which to rent office space. Rents rose from to $53.84 per square foot from $46.12 in the third quarter, according to CBRE. Vacancy levels stand at 8.2 percent, down from 9.7 percent the same time last year. Four years ago, it was 15 percent.

Rob Speyer, co-chief executive officer of Tishman Speyer, a big real estate developer based in New York, said, “San Francisco has led the U.S. commercial real estate market out of the financial crisis.”