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No need to send flowers: Kilroy celebrates truce on huge Flower Mart office complex

There weren’t too many smiles the last time Kilroy Realty Corp. gathered media, politicians and vendors in the damp Brannan Street warehouses known as the San Francisco Flower Mart in December.

While the Los Angeles-based developer has long committed to keeping the wholesale flower market on site as it planned to construct a series of office towers there, activist and former supervisor Aaron Peskin peppered Kilroy with terse questions about how it would keep its commitments of affordable rents and sufficient space for the vendors.

On Monday, the sides came together with a ceremonial signing and a series of speeches designed to celebrate a truce that avoided a November ballot fight over the $350 million development.

Kilroy will spend more than $80 million to build a new 115,000-square-foot Flower Mart, rents will remain “affordable” (but undisclosed), and leases can get passed down from generation to generation, the two sides said at a press conference.

The two sides agreed that tenants must sign off on a relocation site during the complex’s construction. Vendors will vote whether the market will go aboveground or underground.

“The agreement puts into writing a lot of the promises Kilroy has been making from the beginning. There will be a new Flower Mart here at 6th and Brannan. The tenants will have a say in the new design of the Flower Mart,” said Mike Grisso, a senior vice president at Kilroy. “And of course it commits the tenants to not go forward with the ballot measure.”

That’s good news for Kilroy. Peskin said the opposition group had collected 20,000 signatures, more than enough to get a measure on the ballot. Early polls also had the measure with a majority of likely voter support.

Kilroy’s proposal would include about 1.5 million square feet of offices spread across three buildings that range in height up to 250 feet tall. In the surrounding blocks, office developments planned by Alexandria Real Estate Equities, SKS Investments, Boston Properties and Tishman Speyer will pop up.

The agreement didn’t seal the development’s fate fully, however. The site caught Kilroy’s eye because of the Central SoMa rezoning plan that will give the property big height increases. But the developer is still proposing taller buildings than a draft plan allows, which is 160 feet on that site. The complex will also need to squeeze through the city’s office space cap, which developers will hit by next year.

Still, the developer will likely be in the city’s good graces because of the Flower Mart agreement. Kilroy doesn’t expect approvals until 2016, with project completion in 2019.

“There are lots of office buildings. Anyone can put up an office building. I think what office tenants are looking for in the future is something different – an environment, a place, that’s special,” Grisso said. “For us, the Flower Mart is that special place.”

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