Large commercial and residential proposals are sprouting fast out of a two-block radius around the landmark San Francisco Flower Mart. The historic building was part of a $27 million purchase that Los Angeles-based real estate investment trust Kilroy Realty made in June of last year, when it agreed to acquire all the outstanding shares of San Francisco Flowers Growers’ Association, a privately owned entity whose only material asset was a 1.9 acre land site in central SoMa.[contextly_sidebar id=”T3jOd7vdjp4pfwJYJTU9yFkYJsActHjG”]Not only is the Flower Mart site eyed for a towering transformation, other high-rise projects are targeting this part of the Central South of Market area, as well.
“It’s a natural development path,” said Matt Currie, a partner at San Francisco-based CM Commercial real estate firm. “It’s great that the city has embraced that with pending upzoning. It’s going vertical and higher density.”
On the current Flower Mart property at Sixth and Brannan streets, Kilroy is seeking to build a $350 million complex with 1.5 million square feet of offices and 45,800 square feet of retail space in three buildings up to 250 feet high.
The development would include a new $80 million Flower Mart measuring 115,000 square feet above ground—an alternative to the original design that has the market below-grade level.
The latest version “was developed in response to feedback received from the tenants of the San Francisco Flower Mart,” said Mike Grisso, a senior vice president at Kilroy. Tenants “have expressed a preference for an above-ground wholesale flower market even though the parking would be below ground, and thus [the project] would require ramps, escalators and elevators to move goods from the warehouse to the parking area.”
Kilroy will continue to work with tenants to refine the details and decide on a final design, Grisso said.
The company also has been trying to resolve rent and other concerns raised by a group of flower vendors who have threatened to pursue a November ballot measure that could block the project.
“The negotiations are ongoing,” Grisso said. “We’re making progress.”
The project could break ground in late 2016 and finish in 2019, the company said. Current tenants are expected to be offered space in the new complex.
Another issue facing Kilroy as well as other developers is the 1986 ballot measure Proposition M, which caps the amount of large new office projects at 875,000 square feet annually with unused allocations rolling forward.
“It is a concern for us because if there’s not enough allocation, then not all of the projects will be approved at the same time,” Grisso said. “But our project has a good case” because of the Flower Mart’s historic importance to the city.
The Flower Mart opened in 1956 but has roots going back to the late 1800s. Currently, it hosts more than 60 vendors and purveyors of cut flowers, other plants and floral supplies.
“It’s essential that the Flower Mart be built as soon as possible,” Grisso said.
What’s more, he said, the Kilroy project should prove a priority because it is in line with the goals of the city’s proposed Central SoMa Plan.
This plan calls for taller buildings than what is currently allowed at certain locations to spur commercial development as well as transit-oriented growth, street improvements and additional open space.
The plan—encompassing about 260 acres bounded by Market Street to the north, Sixth Street to the west, Second Street to the east and Townsend Street to the south—is expected to be adopted by year-end or early 2016.
Two other high-rise developments are being proposed near the Flower Mart.
San Francisco-based Solbach Property Group eyes a 427-unit residential tower at 636-648 Fourth St., according to an application for preliminary project assessment filed with the city Planning Department. This project would raze two existing low-rise commercial buildings to construct the tower going up 350 feet high and include 3,165 square feet of retail space and 119 parking spots.
A few doors up at 655 Fourth, New York-based developer Tishman Speyer aims to build an approximately 449-unit residential tower with nearly 10,000 square feet of ground-floor retail space. This 400-foot tower would sit atop an 85-foot podium and include two below-grade levels with 97 parking spaces.
Currie was not sure all these projects could be built during this current economic boom cycle because of Proposition M, the city’s long planning process and other factors, he said.
But “the momentum is now,” he said. “These projects take a long time anyway, so you might as well plan now.”