Historic agreement and renewed partnership between KRC and wholesale flower vendors will guarantee a new wholesale flower market is built in San Francisco
SAN FRANCISCO–(BUSINESS WIRE)–Kilroy Realty Corporation (NYSE: KRC) and San Francisco’s wholesale flower vendors today reaffirmed their conceptual agreement to guarantee that a new Wholesale Flower Market will be built in San Francisco, either as part of KRC’s proposed San Francisco Flower Mart office and retail project at Sixth and Brannan, or at another location in San Francisco, to be determined by the San Francisco Flower Mart Tenants Association, which represents the wholesale vendors. This updated agreement between KRC and the vendors comes as the San Francisco Planning Commission gets ready to consider approval of KRC’s San Francisco Flower Mart Central SoMa project on July 18th.
“This partnership represents five years of negotiations and guarantees that the Wholesale Flower Market will always have a permanent home in San Francisco, which has been our goal from day one. The vendors wanted the option to choose the permanent location, so that is what we are giving them. We’re excited both for their future and the future of Central SoMa that the Flower Mart Project represents,” said Mike Grisso, Senior Vice President at KRC.
“Given the major changes planned for our current South of Market neighborhood, we have asked for an agreement with Kilroy Realty that gives us the option to move to a new location in San Francisco, if we elect not to return to Sixth and Brannan,” said Vance Yoshida, President of the San Francisco Flower Mart. “We are very grateful for Kilroy Realty’s responsiveness to guarantee we have the new permanent home we need in San Francisco.”
“After five years, and countless meetings with Kilroy Realty, members of the Board of Supervisors, the Mayor’s office and the community, we are close to an agreement that will provide a state-of-the-art wholesale floral goods market in San Francisco, which will maintain the visibility of our members’ businesses, the jobs of their employees, and the convenience for their customers,” said Louie Figone, President of the San Francisco Flower Mart Tenants Association. “We strongly support the Flower Mart Project because it will allow us to turn our vision for a new permanent home in San Francisco into reality.”
The Flower Mart Project is the largest of the proposed office and retail projects planned for the Central SoMa neighborhood. In addition to funding the construction of a new, 115,000-square-foot wholesale flower market, the project will include most of the new neighborhood-serving retail in Central SoMa, dedicate a site to the City for 100% affordable housing, create thousands of good construction and other jobs, and deliver unprecedented community and economic benefits to the City, including hundreds of millions of dollars in development impact fees and new tax revenues.
The revised project is the product of more than five years of negotiations and partnership between Kilroy Realty, the wholesale flower vendor community, and the City. Key elected leaders have provided consistent guidance and support throughout the project development, especially Supervisor Aaron Peskin, Supervisor Matt Haney, Mayor London Breed, former Supervisor Jane Kim, former Mayor Art Agnos, and the late Mayor Ed Lee.
The Flower Mart Project’s extensive community and economic public benefits are projected to include:
- $39.2 million in direct annual tax revenue for the City/County of San Francisco
$175.2 million in direct, one-time construction-related revenue for the City
- $166 million in fees, including $54 million for affordable housing and $49 million for transportation
- $9.2 million in gross receipts and sales tax revenue
- $20 million construction of new wholesale flower market
- 8,050 annual construction-related jobs, with economic output totaling $1.5 billion during the construction period (2020-2023)
- $5 million to support the Sunnydale public housing transformation under HOPE-SF
- 115,000 square feet of affordable Production, Distribution, Repair (PDR) space
- 100,000 square feet of neighborhood-serving retail and market hall
- 14,000+ square-foot, off-site land dedication to Mayor’s Office of Housing for 100% affordable housing (up to 100+ units)
- 22,000 square-foot child care center (or in-lieu fee)
- 36,000 square feet of on-site privately-owned public open space
- 5,000 square feet off-site public open space
- 1,000 square-foot community room for use by neighborhood organizations
- LEED Platinum certification
- $4 million in public art
The full Planning Commission package for the San Francisco Flower Mart project is available at http://commissions.sfplanning.org/cpcpackets/2017-000663ENXOFAPCADVA.pdf.
About Kilroy Realty Corporation. Kilroy Realty Corporation (KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is one of the West Coast’s premier landlords. The company has over 70 years of experience developing, acquiring and managing office and mixed-use real estate assets. The company provides physical work environments that foster creativity and productivity and serves a broad roster of dynamic, innovation-driven tenants, including technology, entertainment, digital media and health care companies.
At March 31, 2019, the company’s stabilized portfolio totaled approximately 13.2 million square feet of office space located in the coastal regions of Los Angeles, Orange County, San Diego, the San Francisco Bay Area and Greater Seattle and 200 residential units located in the Hollywood submarket of Los Angeles. The stabilized portfolio was 92.5% occupied and 96.2% leased. In addition, KRC had under construction five projects totaling approximately 2.1 million square feet of office space that was 26% leased and 801 residential units. KRC also had three projects in the tenant improvement phase totaling approximately 1.2 million square feet of office, PDR and retail space of which the office components of the projects are fully leased to Adobe and Dropbox.
The company’s commitment and leadership position in sustainability has been recognized by various industry groups across the world. In September 2018, the company was recognized by GRESB both as North American leader across all asset classes and a global leader among all publicly traded real estate companies. Other sustainability accolades include NAREIT’s Leader in the Light award for the past five years, the EPA’s highest honor of Sustained Excellence and winner of ENERGY STAR Partner of the Year for the past six years. The company is listed in the Dow Jones Sustainability World Index. At the end of the first quarter, the company’s stabilized portfolio was 63% LEED certified and 76% of eligible properties were ENERGY STAR certified. More information is available at http://www.kilroyrealty.com.
Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; our ability to re-lease property at or above current market rates; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; and our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2018 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information, and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.
Senior Vice President
Development and Land Planning