investigation
Kilroy Realty invested $579 million to remodel SoMa market, with no return on investment
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Where have all the flowers gone? To the San Francisco flower market, far away.
The city’s Wholesale Flower Market is uprooting its 58-year-old headquarters south of Market and moving to 901 Street in Potrero Hill, the San Francisco Chronicle reported.
The 125,000-square foot market at 640 Brannan Street will close its home in a collection of warehouses at Sixth and Brannan streets on Dec. 26. It will reopen a week later on a 1-acre site on Potrero Hill.
The market employs another 300 people and supports dozens of small businesses, from San Francisco florists to Central Coast farmers. Of the 40 tenants of the flower market, 27 will move their stand and thirteen will retire or start their own business.
The San Francisco Flower Market was forced out of its 4-acre home since 1956 in Central SoMa by redevelopment.
In 2014, Los Angeles-based Kilroy Realty purchased the Flower Market site for $70 million, with plans to build a 2. 2 million-square-foot campus with 3 buildings ranging from 8 to 18 stories.
After dealers agreed to save the market, Kilroy agreed to a transitional location and then incorporate it into the development.
The flower sellers wanted to move just once, so Kilroy bought the Potrero Hill site for $99 million, and agreed to build a new market.
Then the job market slowed a pandemic transition to remote work, and Kilroy found himself holding the daisy.
In total, Kilroy has spent $579 million on assembling a 6-acre development site in Central SoMa and another acre in Potrero Hill, while building a new flower market — without knowing when it would get a return on its investment, according to the Chronicle.
San Francisco’s vacancy rate is 36. 9 percent, according to CBRE, and it may get worse before it gets better.
Kilroy’s vice president, Mike Grisso, said in a statement that the company “is pleased to have created a new, state-of-the-art wholesale flower market that will allow the flower industry to thrive in the future. “
The new market covers 216,000 square feet, adding 125,000 square feet for flower vendors and 90,900 square feet for parking for 150 cars and 23 bicycles, according to SFYimby. Its wavy exterior should be painted purple.
The deal with Kilroy also includes a $20 million subsidy for taxes and other expenses that kicks in when the office project is built. If the office market doesn’t recover, and the project is not built — the market tenants could be on the hook, according to the newspaper.
—Dana Barthélemy
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