Fulton Retail buys future Trader Joe’s location in SF

UPDATE OCT. 9 at 3:50 p.m.:

A company tied to the founders of Avery Bays Real Estate has paid $7 million to buy a 25,000-square-foot storefront long slated for a Trader Joe’s location in San Francisco’s Hayes Valley.

Fulton Retail DE1 bought the commercial space approved four years ago for a Trader Joe’s at 555 Fulton Street, the San Francisco Business Times reported. The seller was China-based Z&L Properties.

The price works out to $280 per square foot.

The San Francisco-based Fulton Retail is based in the same office as 555 Fulton Residential, which bought 18 of the 39 condominiums above the store at 555 Fulton in May. The property was widely reported as having been bought by Palo Alto-based Avery Bays, led by Aaron Chang.

The Fulton companies are both registered to Chang and David Xin Long, founding partners of Avery Bays.

Long told the Business Times that Avery Bays was a “local partner,” while the purchase was actually made by Balance Capital, whose origin is uncertain.

He said the purchase should open the door for Trader Joe’s, which received approval for a 16,600-square-foot store at 555 Fulton four years ago, to finally open.

The market could start operating by fall of next year, Long said, assuming “administrative permitting” by the city.

“We are looking forward to bringing Trader Joe’s to the whole community over there,” Long told the newspaper. “We’re very confident we’ll get along with Trader Joe’s, and have them open the store as soon as possible.”

Supervisor Dean Preston, whose district includes the site, was optimistic.

“Neighbors have waited more than a decade for this to happen, and while there’s work to be done, having a new owner enthusiastic about bringing in Trader Joe’s is a major step forward,” Preston said in a statement.

Long said the grocer will stay within its original 16,600-square-foot footprint, though details of a renegotiated lease were not disclosed. It’s not clear what the landlord will do with the remaining 8,400 square feet of commercial space.

Brokers David Wientjes, Skip Whitney and Brett Reynolds of Kidder Matthews represented Avery Bays and Z&L in the deal.

Regina Wang, Connor Lemley, James Bach and Griffin Walker with CBRE’s debt and structured finance team in Seattle arranged $8 million in financing for the acquisition and construction. “There were a lot of headwinds from a financing perspective, such as higher rates, 100 percent vacant space, insurance market disruption, among others, but we were able to secure a great outcome,” Wang said in a statement.

Z&L Properties, owned by Zhang Li, and its five-story building in Hayes Valley were at the center of a City Hall corruption case against former San Francisco Public Works chief Mohammad Nuru, who was sentenced to seven years in prison.

In July, Zhang flew from house arrest in London into San Francisco to tell a court he had bribed the public works chief to fast-track the condos and future Trader Joe’s location. Zhang paid a $50,000 fine; his company was fined $1 million.

Addition: Previous story did not include information regarding CBRE-arranged financing for the transaction.

— Dana Bartholomew