A new chapter is taking shape in downtown San Mateo as developers move forward with a major mixed-use project anchored by a specialty grocery store, filling a gap left after the closure of longtime neighborhood markets.
For months, residents watched the former Draeger’s property sit empty. Now, however, that silence is about to end.
Developers will build a five-story, 104,000-square-foot mixed-use project called B Street South at 222 E. Fourth Ave. The new building will replace the former Draeger’s grocery store, which closed in February 2025. Construction is expected to begin in early summer 2026.
More importantly, the project restores a full-service grocery store to a neighborhood that lost two key markets in just a few years.
At the same time, rising rents across the Peninsula continue reshaping where people live and shop. In nearby South Santa Clara County, for example, Gilroy rent trends recently hit $2,000, highlighting how affordability pressure keeps pushing growth outward.
Woodlands Market Will Anchor the New Grocery Store San Mateo Is Getting
Woodlands Market, an independently owned specialty grocery chain from Marin County, will anchor the ground floor of the new development. The store will span approximately 19,000 square feet.
This expansion carries special meaning. It marks:
- Woodlands Market’s first location on the Peninsula
- The company’s fourth store overall
Currently, the company operates stores in:
- Tiburon
- Kentfield
- San Francisco
In addition, the new San Mateo store will offer:
- Local organic produce
- A full-service deli and bakery
- Wine, beer, and spirits
- A smoothie bar
- A cafe
According to Marcus Gilmour of Lane Partners, the store will become “a gathering place for the community and a critical partner in San Mateo’s future.”
Meanwhile, growing demand for community-centered retail continues to shape mixed-use projects across the Bay Area, as seen in five mega developments reshaping the region in 2025.
What Else the B Street South Development Will Include
While the grocery store will serve as the main anchor, retail represents only one part of the vision.
The B Street South project will also include:
- 10 housing units reserved for low-income residents
- Additional office space
- A three-level parking garage with 221 on-site spaces
As a result, the site will blend housing, retail, and workspaces into one walkable downtown block.
At the same time, the project supports San Mateo’s broader housing goals. Across the Bay Area, new development continues to rise at the luxury tier while mid-tier housing struggles to keep pace. Your report on Bay Area luxury homes rising while mid-tier housing slips reflects this growing imbalance.
Lane Partners and Prometheus Real Estate Are Leading the Project
Lane Partners and Prometheus Real Estate are developing the project together.
Both firms focus on mixed-use, transit-friendly developments. Therefore, B Street South fits directly into their long-term strategy.
At the same time, downtown San Mateo benefits from sustained investor interest. According to the National Association of Realtors, mixed-use urban projects continue gaining favor as cities prioritize walkability and density.
https://www.nar.realtor
The City Required a Grocery Store as a Condition of Approval
The return of a grocery store did not happen by chance.
After Draeger’s closed in 2025 and Trag’s Market shut down in 2019, residents raised concerns about losing access to fresh food downtown. Because of that feedback, the City of San Mateo required the new development to include a grocery store.
As a result, Woodlands Market now fills a critical gap in neighborhood services.
In contrast to many retail redevelopments that favor restaurants or entertainment, this project places daily needs first.
Why This New Grocery Store Matters to Downtown San Mateo
On the surface, the project adds another building to the skyline. However, the deeper impact reaches far beyond the structure.
For nearby residents, the development delivers:
- Walkable access to fresh groceries
- A new social gathering space
- Affordable housing in a high-cost market
- Increased foot traffic for nearby small businesses
At the same time, the project stabilizes a downtown corner that lost two major community-serving businesses in six years.
According to the U.S. Census Bureau, suburban downtown districts that regain grocery access often see measurable increases in local foot traffic and retail spending.
https://www.census.gov
Construction Timeline and What Comes Next
Developers plan to break ground in early summer 2026. From there, construction will move forward in phases.
Typically, projects of this size require 18 to 24 months to complete. Therefore, a full opening could occur as early as 2028, assuming no major delays.
Meanwhile, city planners will continue refining traffic flow, parking access, and pedestrian safety during the buildout.
A Long-Term Vote of Confidence in Downtown San Mateo
Ultimately, B Street South represents far more than another construction project.
Instead, it signals:
- Long-term confidence in downtown San Mateo
- A renewed commitment to community retail
- Expanded affordable housing access
- Continued investment in walkable urban growth
For residents who feared everyday services were disappearing, the arrival of Woodlands Market marks a turning point.
And for the city, the former Draeger’s site will soon transform from a symbol of retail loss into one of neighborhood renewal.
