Align to Buy Safeway Market in SF’s Fillmore to Build Homes

Align Real Estate has struck a deal to buy a troubled Safeway market in San Francisco’s Fillmore District, with plans to build what could be more than 1,000 homes.

The locally based developer entered into an agreement with the Pleasonton-based grocery chain to buy the 3.68-acre Webster Plaza at 1335 Webster Street, the San Francisco Chronicle reported. The Safeway is slated to close in March.

Terms of the deal were not disclosed.

The store has anchored the historically Black neighborhood for 40 years. But over the past year, it generated controversy by blasting classical music to deter loitering, and shutting its self-serve checkouts to reduce theft.

While Mayor London Breed hailed the deal as an opportunity to build needed housing, critics said the Safeway exit would “create a food desert” in the Fillmore District.

The closure and sale may allow Align to build more than 1,000 homes, according to the Chronicle. The property is zoned for buildings up to 130 feet, while the new owner could build 50 percent more units under state density bonus programs.

“This is a real and rare opportunity to add a significant amount of new homes in this part of the city, and even a new grocery store, and it shows a real interest in investing in housing in San Francisco,” Breed, who grew up in the neighborhood, told the newspaper.

“While in the short-term we are losing a grocery store in the community, there is also a new Trader Joe’s opening nearby and an opportunity for a new market on the site,” Breed said.

While longtime plans have called for a Trader Joe’s at 555 Fulton Street in Hayes Valley, an opening day has not been set.

Safeway, a division of Idaho-based Albertsons Companies, does not plan on being part of the Fillmore redevelopment, the firm said in a statement to the Chronicle. The closest Safeway store is in the Castro, more than a mile away.

While the closure and potential makeover may create a grocery shortage in the Fillmore, it could also spur Safeway to consider redevelopment projects.

San Francisco leaders have for a dozen years lobbied the grocery chain to consider allowing housing on some of its larger sites, including the Potrero Center at 16th and Bryant streets and the Castro property on Upper Market Street. Nothing came of it.

Align Real Estate, founded by veterans of Tishman Speyer in 2015, filed plans in October to convert the industrial part of its development at 790 Pennsylvania Avenue in Potrero Hill into 44 apartments.

In November 2022, the firm filed plans to replace an aging office building in the Mission District with a 265,500-square-foot life science lab at 1717 Mission Street. The company led by Jason Chadorchi also aims to build a 62-story, 826-unit apartment tower dubbed The Cube at 620 Folsom Street in South of Market.

— Dana Bartholomew