SF New Developments

Push is on to shop below, live above

San Francisco Business Times - September 5, 2003

by Ryan Tate

Seeking to spur more housing development in San Francisco, city planners and housing advocacy groups are turning their attention to an underused resource: The roofs of grocery stores. A handful of housing developments have already been built there, and a proposal to encourage more is emerging from a series of meetings between the San Francisco Planning and Urban Research Association, the Housing Action Coalition and staff from the city planning department. Marrying grocery stores and residential development could, they hope, reduce the opposition from neighbors that sometimes scuttles housing proposals.

“Grocery stores are like warm, fuzzy little kitties,” said Gabriel Metcalf, deputy director at the San Francisco Planning and Urban Research Association. “Neighbors like the grocery store and so may be more willing to accept housing.” A housing component also allows a grocery store or developer to finance the parking, often underground, needed to keep the store from adding to parking problems in the surrounding neighborhood. As such, the plan has attracted attention from grocery store owners and developers interested in expanding and upgrading existing stores. Land use attorney Steve Vettel of Morrison & Foerster has handled three grocery-residential projects in the city. At Oceanview Village near the Daly City BART station, Oz Erickson”s Emerald Fund built 370 rental units above an Albertson”s supermarket and a Rite-Aid drug store at the site of a former Lucky grocery.

Emerald Fund also built Petrini Place near Fulton Street and Masonic Avenue at the site of a former grocery store. Petrini features 135 units condominiums and an Albertson”s. Vettel is also the attorney for 450 Rhode Island, a Potrero Hill project that is putting an unselected, 35,000-square-foot grocer in underneath 165 rental units. The project won planning approval two weeks ago. Those projects were possible, Vettel said, in large part because all were built or will be built against sloping hills, allowing the developers to meet the city”s 40-foot height restriction by measuring height from different points along the hill. But the groups discussing changes in the zoning law want to raise the height barrier by at least 10 feet, because without a hill it is not possible to meet the height restriction while combining a large retail store with a 20-foot ceiling, plus the three stories of residential needed to make the project profitable. Another key proposed change to city zoning law would be to allow grocery stores or other retailers to rezone commercial lots as mixed use, allowing housing to go in without the need for a conditional use permit from the city. Instead, developers could meet a series of requirements on open space, design patterns, setback from the street and other issues.

The ideas crystallized at a seminar convened by SPUR in July to study the issue. The meeting brought together grocery store owners, city planners, HAC members, architects and developers. Vettel said, “it was a very positive and good process because a lot of ideas came forward fairly quickly and developed into potential zoning changes to incentivize this type of development. The next step is finding some political support for moving forward with some of these notions.” Meeting participants identified close to 20 sites where residential could go in above retail, including existing stores. “There is a tremendous resource of underutilized resources around the city,” said Dave Latina, the AF Evans vice president responsible for the 450 Rhode Island project. “The grocery stores understand that the best way to maximize the value of their land is to get more grocery store space, and the only way they can do that is to push their parking underground, and the only way they can afford to do that is to have residential above and around the store.” Indeed, GVA Whitney Cressman retail director Julie Taylor sees more than a dozen “pretty good-sized footprints” around the city where such developments would make sense. “There are a lot of sites that are coming online that are being pushed for residential projects,” she said, “but you don”t want your condo in the ground floor of a 30-story tower.”

Ryan Tate covers residential real estate for the San Francisco Business Times.