Supervisor Bilal Mahmood argues that the failure to revive the site shows the need for his proposal to bring Mamdani-style government grocery stores to SF.
By Joe Fitzgerald Rodriguez Politics Reporter
Published Jul. 14, 2026 (SFStandard.com)
Three separate efforts to bring a grocery store back to a vacant Safeway site in the Fillmore have collapsed, deepening a political fight over who’s to blame — and what San Francisco should do about it.
Grocery Outlet, Smart & Final, and Sprouts Farmers Market(opens in new tab) have all explored taking over the former Safeway at 1335 Webster St. on a short-term basis, as Safeway finalizes the sale of the property to Align Real Estate, which intends to build housing on the site.
The collapse of all three efforts leaves the Fillmore, a historically Black and low-income San Francisco neighborhood, without a full-service grocery store for the foreseeable future — more than a year after Safeway’s Webster Street location closed. The failed talks come amid a broader political fight: Supervisor Bilal Mahmood is pushing a ballot measure to tax vacant grocery stores and subsidize new operators, an effort now tangled up with accusations that Safeway hindered efforts to bring in a new grocer.
In an interview, Mahmood said negotiations to bring a grocer back to the site are dead in the water, and emails his office provided in response to a verbal records request back up that account. Sprouts’ interest in the site has not been previously reported.
“Oh my God. It’s devastating news,” said Majeid Crawford, a Fillmore native. “We were really hoping something would happen; the community has been waiting and hopeful.”
In the months before Safeway closed in February 2025, neighbors rallied and pushed(opens in new tab) for the grocer to stay open, or for a new grocer to take over the space. Crawford — executive director of the New Community Leadership Foundation, a group trying to prevent the Fillmore’s gentrification — said the failure to find a new grocer will send shockwaves through the neighborhood.
Safeway’s Webster Street store served the Fillmore community for four decades. The new owner, Align Real Estate, plans a mixed-use project on the site with more than 1,800 housing units(opens in new tab) and a ground-floor grocery. Lawmakers had hoped a temporary grocery store could load Fillmore neighbors’ shopping bags in the years before the project breaks ground.
Mahmood is hoping his ballot measure to establish a fund to subsidize grocery stores and levy a tax on vacant supermarkets will pressure grocers to lease to new operators or reopen. The idea resembles one from New York Mayor Zohran Mamdani, whose proposal would establish government-subsidized grocery stores.
While Mahmood’s proposal faced a setback last week from the Board of Supervisors and opposition from Mayor Daniel Lurie, he’s planning to introduce a motion Tuesday(opens in new tab) for the Board of Supervisors to re-hear the measure by the end of the month, which would restart the process of placing it on the ballot. Lurie previously said he’s working to bring more grocery stores to San Francisco, but new taxes won’t help that effort.
Mahmood alleges the negotiations between the three grocers, Safeway, and Align Real Estate failed because Safeway impeded efforts to find a replacement grocer. Emails Mahmood provided offer a behind-the-scenes look at negotiations marked by canceled meetings, stalled talks, and growing frustration.
“It shows us that Safeway was never intending to actually put a grocery store in there,” Mahmood said of the emails. “We know of three grocers who were made an offer to go onto that property.”
Safeway, Grocery Outlet, and Sprouts declined to comment. Smart & Final did not respond to a request to comment. David Balducci, a principal at Align Real Estate, told The Standard they’ve not given up.
“The Fillmore community deserves a grocery store, and we will do everything we can to bring one to the site,” Balducci said. “Unfortunately, Supervisor Mahmood’s tax on grocery store vacancies would only make it more difficult to open a store.”
Mahmood told a different tale.
“Align told me that there is no plan to do a short-term activation with another grocery operator anymore,” he said.
The effort was difficult from the start — Safeway promised to rip out its freezers(opens in new tab) at the end of 2024, before it even closed, making it more difficult for a new grocer to move in.
In January last year, Grocery Outlet made an offer to Safeway to take over the site. In an email sent Jan. 9, Bill Coyle, vice president of real estate with Grocery Outlet, aired a hopeful tone about his meeting with the supervisor and Align Real Estate.
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“You have [Grocery Outlet’s] commitment we shall pursue with vigor and hope for the best outcome,” he wrote.
On Jan. 22, 2025, Grocery Outlet sent a proposal to Safeway, outlining a “scaled-down” version of its store for two to three years, paying Safeway $400,000 in annual rent. The hope, Coyle wrote, was that Grocery Outlet would become a permanent grocer once Align Real Estate’s project was complete.
“Politicians happy. Community happy,” he wrote.
His optimism was short-lived.
Coyle said he wrote to Mahmood Feb. 4 that “I have NOT heard back” from a consultant working for Safeway. In an email venting his frustration over the process, he alleged Safeway has a pattern of making it difficult for other grocery stores to open.
“It’s what they do,” he wrote to Mahmood, “impede competition.”
By Feb. 19, the parties met once again. Coyle emailed Mahmood shortly before, noting that the cost to open a grocery store there — even a temporary one — would be at least $2 million.
Emails revealed the deal’s definitive end in April: Eric Holzer, senior director of corporate real estate at Albertsons, which owns Safeway, wrote to Mahmood acknowledging that Grocery Outlet “dropped their interest.”
In the intervening months, Safeway and Align Real Estate held discussions with Smart & Final, a grocer with other San Francisco locations, and Sprouts, a Bay Area staple exploring its first San Francisco location in the Showplace Square neighborhood.
Sources with knowledge of the deal rejected the notion that Safeway had impeded efforts to bring in a new grocer and said the grocers walked away from the deal for financial reasons. The amount needed to bring the building up to code, which may have been $2 million to $4 million, was so high that they would need to operate a store there longer than the proposal allowed for it to pencil out.
Mahmood said the emails show Safeway “intentionally dragged their feet to allow the deal to die.”
The lack of a local grocery store hurts low-income Fillmore families, people with disabilities, and seniors who can’t travel far, according to Crawford, the neighborhood advocate. He knows its importance personally: His mother was an artist and single parent who shopped at Safeway when he was a child. She would stretch her limited dollars and buy ingredients to whip up a family favorite: spaghetti and meatballs.
“To hear all those things fell through,” he said, “it feels like our community is being erased.”
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