Avery Bays Revealed as Buyer of Future Trader Joe’s Site

Avery Bays Real Estate Development has been revealed as the mystery buyer of a future home for a Trader Joe’s market and unsold condominiums in San Francisco’s Hayes Valley.

The San Jose-based developer led by Aaron Chang bought the 16,700-square-foot grocery store and condo building at 555 Fulton Street, the San Francisco Business Times reported.

The seller was embattled Z&L Properties, whose Chinese owner Zhang Li and the Hayes Valley building are at the center of a city corruption case. Terms of the deal were not disclosed.

The property’s impending sale was announced in March by Supervisor Dean Preston, who represents the neighborhood. He called for a hearing to discuss the stalled Trader Joe’s store. The hearing did not take place given the property would be changing hands.

The deal is expected to close in the coming weeks, and stakeholders are hopeful a sale will pave the way for Trader Joe’s to finally open. The opening was expected this year, but Z&L has struggled to complete the project.

The five-story building is wrapped in a City Hall corruption case against former San Francisco Public Works chief Mohammad Nuru. Li was arrested in London in December on suspicion of a kickback scheme involving Nuru to advance the 139-unit project. He was released to house arrest after posting bail of $18.5 million, and now faces extradition to the U.S.

Z&L, which has an office in Foster City, bought the 555 Fulton site in 2015, but the project was plagued by delays city officials blamed on the developer.

The company was accused by city planners of redesigning the building without the city’s permission after winning approval.

In early 2020, the project became the center of the corruption probe into Nuru, who was arrested on fraud charges after he was accused of awarding lucrative city contracts to friends, accepting gifts as bribes from developers and lying to the FBI.

Nuru was sentenced last summer to seven years in prison after pleading guilty to honest services wire fraud involving bribery and kickbacks.

Meanwhile, Z&L Properties has struggled to complete projects in San Francisco and San Jose.

In San Francisco, Z&L owed $2 million in back taxes on The Oak, a boarded-up 109-unit condo tower at 55 Oak Street.

In San Jose, unbought condos in the firm’s new 640-unit luxury complex at 188 West St. James Street in Downtown have been put up for sale for a combined $300 million.

The financially troubled Z&L has been written up for code violations in San Jose, and faces a $1,000-a-day fine for neglecting a historic church at 43 East Saint James Street.

— Dana Bartholomew