Safeway in South San Francisco hits construction milestone

The lot was vacant for roughly a decade before the Safeway groundbreaking began in 2022. Similar to many developments over the last couple years, it also faced financing challenges, pushing back the completion date from 2024 to 2025. 

For years, the city has been adamant about ensuring any new development on the site including a grocery store. 

Grocery stores don’t yield the highest margins for developers, meaning cities often have to explicitly request such establishments as part of the planning and development approval process. In San Mateo, the recent closure of the downtown Draeger’s Market caused concern, especially given the closure of several independent food and grocery stores over the past couple years. The City Council had also voiced its preference for the developer, Lane Partners, to ensure a grocery store can operate in at least a portion of the new space.  

Ben Yu, managing director of acquisitions and development at SteelWave, said the firm has had to work hard to balance the needs of South San Francisco community residents with long-term financial viability of a project.

“We just wanted to make sure that if we brought in a Safeway, that it wasn’t just groceries but that it also had a Starbucks, a pharmacy and a Wells Fargo bank,” Yu said. “That’s why this is 64,000 square feet, and it’s a 24-hour Safeway.” 

But despite the lack of financial incentives for developers, demand for grocery stores is only increasing, especially since cities are under pressure to turbocharge development as part of state requirements. 

Yu said the mix of uses is not only successful from a financial standpoint, but also for community members, who would prefer more vibrancy to new developments.

“We think the integration of life science, the residential and the retail will make everything more lively and exciting,” Yu said. “If you build an office park, it’s busy between 9 a.m. to 6 p.m. and … in the evenings and weekends, it’s completely deserted. As an office worker or lab technician, who wants to be there if there is nothing around there to be excited about?”

Mayor Eddie Flores said the Safeway and larger development is a critical part of revitalizing the area and improving economic opportunities for residents. 

“This project has truly been a long time coming. I’m incredibly proud to see it finally moving forward. For years this site at El Camino Real sat underutilized … now we’re on the cusp of something that will transform the ecosystem around there,” Flores said. “This is about economic mobility, providing jobs and building something that reflects the hopes and needs of the community.” 

The Safeway store is expected to open around the middle of next year. While the life science and residential developments received city approvals, they have yet to start construction.

Note to readers: The story has been updated to reflect that construction of the project is still ongoing.