Kilroy Realty Corp.'s proposed revamp of the San Francisco Flower Mart just got a lot bigger, expanding from 1.5 million square feet to 2.1 million square feet after the purchase of a new adjacent site.
The new deal will allow for the inclusion of a "market hall" and will encompass the 1.75-acre property at 620 Brannan St., which Kilroy bought on Friday. The site sold for $31 million in cash and $56 million in stock from the Zappettini family, which has owned the property since the 1950s, according to the San Francisco Chronicle, which first reported the deal. Kilroy had already assembled 5.2 acres of land on the site from three different owners. Now, the $1.5 billion project will cover an entire city block.
The new deal means that Kilroy (NYSE: KRC) now owns seven acres of one of the biggest commercial developments currently being rezoned under the Central SoMa plan. The project is in a prime location: only one block from the Fourth and Brannan stop of the future Central Subway.
John Zappettini said his family had spent almost a decade working on redeveloping the property, adding the deal now allows Zappettini Properties to become a limited partner with Kilroy Realty. When developed, the Flower Mart will be second in size only to the Embarcadero Center.
“We are very pleased to be able to play a role in the Flower Mart’s future with the addition of our property,” Zappettini said in a statement.
The new addition will add 600,000 square feet, with a mixed allocation of retail and and office space. "We are working through the conceptual design process on the combined site, so many of the variables are in flux but as you can imagine it's predominately office," said Mike Sanford, Kilroy Realty's executive vice president of Northern California. He said the additional development wouldn't affect the project's timing. The project will require planning approval, office space allocation under the city's Prop M ordinance and finalization of the the Central SoMa plan.
The flower mart on the site has 55 vendors employing 350 workers serving more than 4,000 florists, restaurants, hotels, caterers, party planners and others. The site has a fraught history: In 2014, a group of vendors, wholesalers and vendors pushed to have the redevelopment of the market at Sixth and Brannan put on the ballot, hoping to prohibit developers from rezoning the area. That disagreement eventually ended in a truce for the development. Under the deal, Kilroy plans to spend more than $80 million to build a new flower mart where rents will would remain “affordable” to vendors over decades.