SFO is still struggling to regain airline passengers, but four new shops, including longtime local bookstore Green Apple Books, are coming to Harvey Milk Terminal 1.
The Board of Supervisors voted unanimously on Tuesday to approve leases with Green Apple Books and its partner Hudson Group, along with shoe retailer Johnson & Murphy and food vendors Culinary Heights Hospitality and Proper Food.
Construction is expected to begin in October 2023 and the store is expected to open in March 2024, though that could change depending on airport traffic, Green Apple co-owner Pete Mulvihill said.
The 12-year lease has minimum annual rent of $460,000 as long as airport traffic reaches 2019 levels for two months, or 8% of sales up to $2 million and 10% above $2 million.
The expansion is a bet that San Francisco’s tourism sector will recover, despite SFO losing more passengers than any other U.S. airport during the pandemic, in part because of its status as a gateway to Asia, where the coronavirus originated. The airport expects full passenger recovery by 2023.
Construction of the space will cost a minimum of $1.5 million. It’s more than Green Apple, which was founded in 1967, could afford. But Hudson Group, which has around 1,000 store locations around the country, will be the majority owner and responsible for rent and paying staff, Mulvihill said.
“The way the deal is structured, with Hudson as our partner, Green Apple doesn’t have to make much of an investment upfront,” Mulvihill said. “We could have gone this alone. We felt this was the safest way to pursue an opportunity like this.”
Revenue projections at the airport location are much higher than existing Green Apple stores, justifying the higher rent, he said.
“It is a tiny margin business. The advantage of airport is volume,” he added.
Green Apple staff will work to highlight local authors and other favorites, ensuring it’s “not a generic airport store,” though some books will be more mainstream than Green Apple’s existing San Francisco locations, he said.
The expansion comes soon after Green Apple closed its Annex location next to its main shop in the Inner Richmond. The consolidation was mostly to cut down on non-book inventory like magazines, records, gifts and used DVDs, not because of pandemic distress. There weren’t any layoffs at the 40-person company, which also has locations in the Sunset and runs Browser Books on Fillmore Street.
“Business is mostly back. Overall we’re pretty close to pre-pandemic,” Mulvihill said.
“In the long run it isn’t enough,” he added, because rent, health insurance, wages and other costs keep going up.
Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf