Deal sealed for Mid-Market development

A rendering of the proposed CityPlace retail project on Market Street between Fifth and Sixth streets. A rendering of the proposed CityPlace retail project on Market Street between Fifth and Sixth streets. Photo: Courtesy Of Gensler Architects Photo: Courtesy Of Gensler Architects Image 1 of / 4 Caption Close Deal sealed for Mid-Market development 1 / 4 Back to Gallery

Signed, sealed and delivered. The deal bringing the CityPlace development on Mid-Market back from the dead has officially closed.

With one exception: its name has been changed to Market Street Place, reflecting how even this blighted part of San Francisco's main thoroughfare is becoming a hot city property.

The deal closing was announced by Dallas real estate firm Cypress Equities and the giant New York private equity firm Carlyle Group, who are partners in numerous large-scale retail projects across the country. Financial terms of the deal were not disclosed.

"We needed to have a fresh start, and we want the association with the Market Street brand," said Chris Maguire, CEO of Cypress Equities, which will develop the 260,000-square-foot project. "Look what's happened, even to the Mid-Market area, from Twitter to Dolby to multifamily developments," he added, referring to big-name companies moving in and apartment buildings going up just west of the retail project.

Maguire said demolition of the old buildings between Fifth and Sixth Streets will begin this year, with the five-story, glass-fronted Market Street Place opening to shoppers in early 2015. The project's original design will remain the same, except for a few modifications, he said, and a number of prospective "multi-floor" tenants have expressed interest.

J.C. Penney, which was rumored to be looking, is not one of them, he said. Maguire would not disclose names of interested parties, but threw out potential categories of retail, such as consumer tech, entertainment, fashion and home improvement.

"There's a wide variety of tenants with a lot of interest. They realize how scarce space is on Market Street is, especially with 200 parking spaces" built into the project, he said.

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The Carlyle Group clearly agrees. "This desirable location just steps from public transportation provides destination retail options for shoppers in the heart of San Francisco," said Paul Brady, the firm's managing director.

We've heard about the area's promise before, only to be disappointed. Now, it's worth believing.

Start them out really young: An Atlanta preschool franchise is targeting the Bay Area to add to its 250 facilities across the nation.

The Primrose School Franchise Co., catering to children from 6 weeks to 5 years old, plans to open in Sunnyvale by the end of next year, with Fremont to follow soon after. Three more are on the drawing board, including San Francisco and Walnut Creek.

"We definitely see the opportunity for early child education there," said Cory Durden, Primrose's director of franchise operations, pointing to the region's favorable demographics, like the prevalence of dual income households.

Tuition is approximately $400 a week, depending on the location of the school. While the day programs stop before first grade, after-school classes are offered for students up to the age of 12. The schools have a typical capacity of 180, depending on state licensing requirements.

The company, which has been in business for 30 years, started out in the Southeast and has spread steadily westward. In addition to its expansion plans in California and the Pacific Northwest, Primrose schools will open in New Jersey, Massachusetts and Pennsylvania by the end of the year, said Durden.

Each school is independently owned and operated, with a set curriculum designed by the company. For 6-week-olds the day mostly consists of child care, but even at this stage structured learning kicks in, with sign language and coordination exercises. Later courses, ranging from science and technology to language and literacy, focus on "multiple aspects of learning, character development and enrichment," said Durden.

The company is accredited nationally by AdvanceEd, an amalgamation of three regional U.S. school accreditations agencies, which give their seal of approval to 30,000 public and private schools in the United States and overseas.

On the strictly business side, each Primrose school requires an investment of between $3 million and $4 million (closer to the latter in the Bay Area) to build and launch, he said. That includes a $70,000 up-front fee to the company, which also takes royalties of up to 7 percent on revenues - 2 percent for Bay Area franchisees in the first year, said Durden.

The average annual revenue per school is $1.6 million. The company reported overall system revenues of $342 million in 2011, up 10 percent over the previous year. Durden said the company is on track to increase revenue again this year.

So, yes, you need some disposable income and, perhaps, an SBA or other loan to get into the business. The typical franchisee comes from a corporate background, said Durden.

"They're tired of climbing the corporate ladder, and want to get back to being involved with the community."