Safeway to Close, Sell San Francisco Store for Housing Project

San Francisco city officials have been moving to cut red tape to facilitate office-to-residential conversions in the city as they seek to replace empty offices with new housing and other uses.

A project announced last week in the Fillmore District is expected to bring a new housing to an area that has seen little housing development in recent years, but the property it will replace isn’t obsolete: it’s the largest grocery in the neighborhood.

Safeway is selling its store in the Fillmore District to San Francisco-based developer Align Real Estate, with plans to shutter the store in March so Align can build a housing and retail development on the nearly four-acre site that encompasses the grocery and its parking lot.

According to a report in the San Francisco Business Times, Safeway, which has had a store at 1335 Webster Street site for several decades but has no plans to be part of the new development. Employees at the Fillmore Safeway will be reassigned to one of the Pleasanton-based chains 15 remaining supermarkets in San Francisco.

Dean Preston, a San Francisco supervisor whose district includes the Webster Street site issued a statement expressing concern about losing the area’s only supermarket in a few weeks.

“While my office is open to proposals for housing development on this large surface-level parking lot, we are extremely concerned with the potential loss of this grocery store in the heart of the Fillmore, and especially the possibility of losing it as soon as March, which we view as unacceptable,” Preston said in the statement, according to the report.

Mayor London Breed welcomed the redevelopment in a statement that called the project a “real and rare opportunity to add a significant amount of new homes” in Fillmore, an area that saw housing displaced by urban renewal projects in the 1960s.

Breed noted that a Trader Joe’s market is scheduled to open in Hayes Valley within a mile of Webster Street. She also said the redevelopment of the Safeway site might create an opportunity for another food market to be part of the project.

Breed is supporting a ballot measure known as Proposition C to waive the city’s property transfer tax for office buildings that are converted to homes in San Francisco. Proposition C will be on the March 5 ballot that will also feature the presidential primary election.

Under current law, transactions of properties in San Francisco valued at more than $10M incur a transfer tax ranging from 5.5% to 6%, a higher rate than other large cities in California.

Another measure on the March 5 ballot is Proposition E, which will expand the resources available to the San Francisco Police Department to combat crime in the city, including the deployment of drones, security cameras and license plate readers.