Can San Fran’s Ghirardelli Square make a comeback?

Ghirardelli Square | BCBusiness
Ghirardelli Square, a former chocolate factory, once again hopes to draw in the locals

Ghirardelli Square, an iconic property on San Francisco’s waterfront, hits the refresh button to attract a local crowd

The sign of a truly successful tourist destination—one that can endure the ebb and flow of economic tides and social fashions—is one that draws in the locals. That’s certainly the case with Vancouver’s Granville Island—the city’s top tourist attraction, with over 10 million visitors each year, including many residents who go there to shop, eat or see a show.

It was also once the case at San Francisco’s Ghirardelli Square, which occupies prime waterfront real estate on San Francisco Bay. The former chocolate factory, which dates to the 1860s, was converted into a mixed restaurant-and-retail space back in 1964, becoming one of the first such “adaptive re-use” projects in the U.S. For its first 25 years, the development was a huge success—capitalizing on the crowds from neighbouring Fisherman’s Wharf but also attracting locals with an eclectic mix of galleries, restaurants and shops.

The success of Ghirardelli would ultimately be the inspiration for retail conversions across North America, including Boston’s Faneuil Hall Marketplace and New York’s South Street Seaport. Even Vancouver’s Gastown revival of the early 1970s was modelled, by developers of the time, after the hip and happening new San Francisco neighbourhood.

But in the ensuing decades, Ghirardelli Square fell out of favour with locals—tarred with the same brush that San Franciscans used on Fisherman’s Wharf, with its reputation for overpriced ice cream shops, wailing sea lions and aggressive buskers. Whereas in the late ’60s about half of the people funnelling in and out of Ghirardelli Square were locals, by the late 1980s that number had dropped to one in five. As Pete Kane, a writer with SF Weekly, wrote in an October 2013 article: “If the last time you were in Ghirardelli Square was to escort a visiting elderly relative who wanted to buy fudge with traveller’s cheques, that’s because it kind of sucks.”

In September 2013, James- town—an Atlanta-based investment firm—purchased the retail portion of the square for a reported $54 million. Jamestown also owns New York’s foodie mecca Chelsea Market, and it hopes to work a similar magic at Ghirardelli, where currently over half of the property’s 100,000 square feet of rentable space is leased. The success of the retail space is vital to adjoining Fairmont Heritage Place with its 53 private residences (See “Branching Out,” below). That property, managed by the Toronto-based Fairmont hotel chain, was developed by JMA Ventures of San Francisco, which bought the entire Ghirardelli property in 2004 but had to turn the retail space over to the banks in 2010 as a result of the recession.

“We’re ecstatic that Jamestown is now the owner of the retail space,” says Kevin Morgan, JMA’s VP of acquisitions and finance. “They have great experience with properties like Chelsea Market and a lot of money behind them. They’re committed to investing $15 million to upgrade and refurbish the square.” Morgan says that they’ve been told by Jamestown that a high-end restaurant operator will be brought on in early 2015. “We’re surrounded by these great neighbourhoods—Russian Hill, the Marina District. When you bring in a high-end restaurant, you’re going to be attracting people from those neighbourhoods.”

The knock against Ghirardelli Square has long been that, in addition to being cheek-by-jowl with Fisherman’s Wharf and the messy spillover from that area’s tour-bus and cruise-ship crowd, the area is pretty isolated from the rest of the city. Still, if the square’s new owners succeed and return Ghirardelli to its former glory—a destination for foodies, weekend shoppers and camera-snapping tourists alike—it’s a hilly hike that many San Franciscans just might be willing to make.

Branching out

The Fairmont Hotel brand is well-known in Canada: headquartered in Toronto, its roots are in Western Canada as the successor to the CP Hotels chain, with iconic B.C. properties that include Hotel Vancouver and Victoria’s Empress. But the chain itself takes its name from its flagship Fairmont San Francisco hotel in Nob Hill, completed in 1907. For over a century it was the only Fairmont property in the city, until Fairmont Heritage Place opened in Ghirardelli Square in 2008.

Amid the less-than-stellar hotel options in the area, the five-star Fairmont property stands out: unobstructed views of the Bay from spacious outdoor terraces, fully equipped and furnished suites (with the option of personal shoppers to stock your kitchen prior to arrival), a Fairmont car service and much more. According to developer Kevin Morgan, 55 per cent of the units are fully sold, with the remaining residences functioning as hotel suites. One-tenth deeded ownership for a one-bedroom unit, which amounts to 35 days of use per year, starts at US $179,000; nightly stays are also available, starting at US $549/night.