Tavern on the Metreon Never a Done Deal

SAN FRANCISCO-Tavern on the Green, the heavily-touristed restaurant in NYC’s Central Park generated a lot of news stories last year when its operators announced plans to launch a West Coast iteration overlooking this city’s urban oasis, Yerba Buena Gardens. More than $10 million reportedly would be spent on the build-out of a 43,000-square-foot space atop the Metreon, headlining an effort by Forest City Enterprises and Westfield to remodel, re-tenant and thereby revitalize the under-performing 360,000-square-foot development for success in 2010.

Forest City called it an “an extraordinary addition” in the May 2008 announcement. Westfield called it “an ideal complement” to the cultural, hospitality and convention businesses in the area. “We have been anxiously waiting for the perfect opportunity…and we are pleased to say that we have finally found it…, said Tavern on the Green CEO Jennifer LeRoy in the same announcement. “The City of San Francisco, with its vibrancy, diversity and passionate dining culture, combined with the perfect setting on a park in the heart of the city is simply too good to be true.”

Apparently it was. A source with Tavern on the Green tells GlobeSt.com it never made a firm commitment to open at the Metreon and that such a commitment is now on indefinite hold as the restaurateur winds down its Central Park operation under Ch. 11 of the US Bankruptcy Code, having lost its leasehold at the end of August. Forest City did not respond to GlobeSt.com’s requests for comment. Westfield tells GlobeSt.com in a statement that it is “unaware of how recent developments may affect Tavern on the Green’s timing and planning.” It declined to say whether that means they expect the restaurant to open at the Metreon eventually and whether they are currently marketing the space to other potential tenants.

A firm lease commitment was apparently contingent upon Tavern on the Green having its Central Park lease being renewed, which would have ensured the future cash flow to borrow against for the expansion. The restaurant reportedly drew 600,000 guests and generated $36 million in sales last year. Without a new lease agreement for its famous location, however, they lost leeway with creditors. Two weeks after learning of its fate the company opted to file Ch. 11 bankruptcy, which provides a business protection from creditors while it reorganizes.

In June, when everyone was still hopeful, Tavern on the Green’s COO Michael Desiderio told the San Francisco Business Times that if the lease was renewed restaurant ownership would “probably be in San Francisco the next day to finalize design details. If we don’t (get to renew in New York), it may take longer, but we are … very much committed to being part of Westfield, of the Metreon and of SoMa.” Late last month, Desiderio declined an opportunity to speak with GlobeSt.com about the company’s future plans. A spokesperson told GlobeSt.com that everything is on hold while it focuses on completing its run in Central Park.

“Our biggest focus is to close out Tavern on the Green in New York City in a way the restaurant deserves,” she said. “We filed [Ch. 11] so we could close properly.”

The cost of closing properly could be Metreon’s plans for opening in Spring 2010. Earlier this year tenants were told that renovations would be done by next month, giving tenants several months to build out their spaces for an April 2010 grand re-opening of the development, according to a June article in the San Francisco Business Journal. But that may no longer be the plan. Westfield tells GlobeSt.com this week that the remodel, approved by the San Francisco Redevelopment Agency in March 2009, is expected to begin “later this year and finish in 2010.”

An $85-million joint venture of Millennium Partners and Sony Corp. of America, the Metreon opened at Fourth and Mission streets in 1999, overlooking Yerba Buena Gardens, which is surrounded by Moscone Convention Center, San Francisco Museum of Modern Art and Yerba Buena Center for the Arts. Three years after it opened several stores had closed, including Microsoft and Discovery Channel, prompting Sony to open its own stores in the center and also to operate other companies’ stores for them. A high-end restaurant called Montage also didn’t last long but the 16-movie theater and the food court reportedly did well. The four-story complex is currently home to the 16-screen movie theater, a few restaurants and a few retailers.

Westfield and Forest acquired the development in 2006 for approximately $66 million just as it was winding up a $420 million, one-million-square-foot expansion of the 500,000-sf San Francisco Center located one block away. At the time the companies said they planned to take over leasing and management and look to re-tenant spaces along Mission and Fourth streets, possibly with higher-end retailers. “We expect the synergy of the new retail and entertainment venues at Metreon, Westfield San Francisco Centre and Yerba Buena to create a dynamic retail, entertainment and cultural district from SoMa to Union Square,” said Forest City chief executive James Ratner in a prepared statement.

Westfield says it has received strong interest from tenants as a result of the remodel, which will reportedly make the building easier to navigate. “A spacious two story high atrium-style entry on Fourth Street will serve as the new main entrance and allow new views through the building to Yerba Buena Gardens,” Westfield says in a statement prepared for GlobeSt.com “New retail entrances will open to the street. A relocated food court and dining terrace will overlook the park and include outdoor seating. Another of the reasons we believe in this site is because it is a public transportation hub located amid a bustling business, convention and hospitality corridor.”

Tenants said to have signed leases for the ground floor of the Metreon as of June included several 1,500- to 2,700-square-foot restaurants with their own entrances, including Bay Bread’s La Boulange Bakery, Best-o-Burger, and a Asian noodle concept by E&O Trading Co., according to a story at that time in the San Francisco Business Times, and there will reportedly be an interior food court with a dozen or so vendors. Existing ground-floor tenants include Jillian’s, Luna Azul, Penguino and Sanraku, all restaurants, as well as Chronicle Books, NYS Collections and Tilt.

Upstairs with the would-be Tavern on the Green space, the vast amount of additional space is said to be devoted to tenants cultural in nature. Reportedly negotiating for space earlier this year were Lorraine Hansberry Theater; Museum of Craft+Design; the Filipino Cultural Center; and others. A Westfield spokesperson did not respond to a Tuesday request for an update on the leasing and build out for the grand re-opening, including any plans for the space slated for Tavern on the Green.

“The site is currently in transition, but we’re excited about its future,” Westfield states. “Metreon is in a pre-development stage and there is significant interest by a wide range of appealing tenants. These tenants will be local, regional and national with a focus on entertainment, food, arts and culture, and retail. Interest by these tenants is not dependent on the presence of the other.”