Hayes Valley awaits a Trader Joe’s
For years, a grocery store has been “coming soon” to 555 Fulton St., a 139-unit condo building in San Francisco's Hayes Valley.
The promise of an affordable grocery store was a key community demand when the property won development approvals more than a decade ago — the developer was given extra height in exchange for agreeing to put a food market on the ground floor.
First, it was supposed to be New Seasons, a market based in Oregon. After that group walked away, the developer signed a deal with Trader Joe's in 2019. As a chain store, Trader Joe's required special exemption from the neighborhood's formula retail ban — that was approved in early 2021.
Yet, despite the accommodations around height and zoning, the store remains stuck in limbo as the group that developed the property has been unwilling to pay for the tenant improvements required by the lease agreement with Trader Joe's.
With the long-promised Trader Joe's no closer to opening than it was two years ago, Supervisor Dean Preston on Tuesday called for a hearing to see if a little pressure from City Hall might help shake things up. With the building's 139 condos up and running, the developer has an obligation to deliver on the store, Preston said.
“For decades, neighbors in Hayes Valley and the Western Addition have asked for a neighborhood grocery store,” Preston said. “The city made special rules to make this happen at 555 Fulton, and I'm beyond frustrated that, despite full city approval nearly two years ago, there is no tangible progress from the developer to deliver.”
The difficulties with the property date to 2015, when developer Z&L Properties purchased the site at 555 Fulton. After construction was well underway, however, city building inspectors discovered that the developer had redesigned the basic structures — including the curtain wall system — without getting planning permission.
That led to multiple lawsuits and three years of delays but, eventually, the 139 housing units were completed with a 16,686 square-foot ground floor retail space.
Z&L Properties is partially owned by Chinese billionaire Zhang Li, a real estate tycoon who was arrested last year in London and is accused of bribing public officials as part of the Mohammad Nuru investigation.
For Hayes Valley residents, the saga of dealing with Z&L Properties has not been pleasant. In addition to the 555 Fulton property, Z&L owns 50 Oak St., a condo building that was completed more than two years ago but sits empty. Both that building and the retail space at 555 Fulton are under contract to a San Francisco investment group. That deal has been pending for more than six months and has not closed yet.
Hayes Valley Neighborhood Association President Jen Laska said the inability to land a store means that residents have to take a bus or drive to get groceries.
Laska said Trader Joe's has told the neighborhood group that it is still hoping to occupy the space. The grocery chain did not return an email seeking comment. Z&L also did not respond to a request for comment.
“What they have said is they are still interested in coming to Hayes Valley in that space and that Trader Joe's has done everything that they need to do. And that the city has done everything it needs to do,” said Laska. “So the hold up is all Z&L.”
She said the fact that two of the biggest developments in Hayes Valley are suffering from neglect is “pretty frustrating.” She said Trader Joe's had agreed to work with Hayes Valley nonprofits to maximize the number of local residents who would be hired.
“There are a lot of lowincome seniors in the neighborhood who can't afford Whole Foods and can't carry their groceries very far,” she said. “Did Z&L run out of money and now they are sitting on these properties hoping that the economy turns around and the prices go up? I don't know.”
Preston said the community deserved answers.
“If there are legitimate reasons for not moving forward, let's hear them. But delaying without a public explanation is not acceptable,” he said. “This space has been vacant for too long already, and we want to see it activated.”