When Nina Veaco, founder of the toffee company Cheeky Bits, got an Instagram DM in February from a stranger offering free rent so she could open a brick-and-mortar candy shop, she thought it was a scam. “I was like, if I respond, is someone going to hack me?” she said.
She asked her mom, an attorney with a LinkedIn premium account, to look up Christine Yuen, who had sent the message. Sure enough, Yuen works for San Francisco’s largest office landlord, BXP. “It took me a moment to be like, ‘Oh wait, this is legit,’” Veaco said. “’This is real, and it’s really good.’”
Five months later, Cheeky Bits opened a storefront in a former See’s Candies location, one of eight tenants BXP recently signed for Embarcadero Center, its 3.3 million-square-foot Financial District office complex and mall.
As BXP strives to attract tenants to the four-block campus, which has bled national retailers in the last several years, it has focused on local brands, many of which the company hit up on social media with offers that seemed too good to be true.
“Prior to the pandemic, there wasn’t this kind of outreach,” said Yuen, a senior VP of leasing at BXP.
However, in the post-Covid leasing landscape, it pays to take a more creative (and aggressive) approach.
As the leasing team reeled from the loss of Ann Taylor, Loft, M.M. LaFleur, L’Occitane, Victoria’s Secret, and Banana Republic from the shopping center, BXP sent a rallying cry to every San Francisco employee: Tell us about the local businesses you’re obsessed with.
Pitches poured in in the dozens from every department, and the leasing team compiled them into a master list of targets. The idea to inquire about Cheeky Bits came from a member of BXP’s legal team who had received some toffee as a gift and loved it.
“A lot of these local businesses do not run with a broker,” Yuen said. “We visited stores. We went to farmers markets. We DMed folks on Instagram. We sent emails to contact pages. We tried all avenues.”
After eating a particularly delicious food-truck smashburger, Yuen messaged the seller on Insta herself in January. Burger Littles owner John Nguyen also initially thought the DM dangling free rent was beyond belief. But he decided to give Yuen a call just in case.
He’d been in touch with landlords in Noe Valley and on Haight Street, but none had offered a deal quite like BXP’s. While the real estate firm declined to share details of lease agreements, tenants told The Standard they were offered between four and six months of free rent; after that, they would pay a monthly percentage of their sales (generally 10% to 15%).
Despite his concerns about foot traffic, Nguyen was convinced by the deal and the fact that his Embarcadero Center space was nearly move-in ready. When he opens this month, he plans to lean into online orders and catering to supplement the revenue from office workers and tourists who stop in.
“The location is a little bit tricky,” said Nguyen. “I know it’s going to be a challenge, but I’m ready for it.”
The calculus works for both sides. Embarcadero Center’s 3 million square feet of office space are its main source of revenue, and BXP wants to make the area functional for tenants by offering amenities instead of the yawning vacancies that had taken hold.
“It’s really important that the retail is vibrant, because it‘s the front door to our office space,” Yuen said. Embarcadero Center’s office space is about 85% occupied, while retail occupancy is about 70%, according to BXP.
The hope is that filling the vacant storefronts will energize the promenade, boost foot traffic, and increase sales to the point where retailers can handle market-rate rents. It’s not a major financial lift on BXP’s side, Yuen added, since most of the spaces are lease-ready: “A lot of these deals are really low-cost on our side — there’s very little risk.”
Nutrient injection company B12 Love received a message via Instagram, according to cofounder Armando Gallegos, after a BXP employee had used the company’s services in Walnut Creek. B12 Love has a storefront in the Marina; it wanted to open a second San Francisco location at some point, and BXP’s inquiry accelerated the timeline.
In addition to the favorable rent terms, BXP offers the retailers free email advertising to its office tenants, including those not at the Embarcadero Center, he added. “It just seemed like a really good opportunity for our brand, so we decided that we’re willing to take a chance,” Gallegos said.
For Veaco, her first full week of slinging toffee, gummies, and other candy has been shockingly smooth. The building feels safe and clean, and the number of people popping into her shop has ramped up since opening day. She has been impressed with BXP’s proactive communication, which she said is a stark contrast to her previous attempt to score free rent through the city-funded Vacant to Vibrant program.
“For months, I emailed, called, and Instagrammed them about my application,” she said. Ultimately, she’s happy she didn’t hear back from the other program quickly. “I ended up getting a better deal with BXP.”