Saturday, April 30, 2011

Walnut Creek's Shadelands Business Park Showing its Age

It's a business park that is having trouble attracting business. 

The 240-acre Shadelands Business Park off Ygnacio Valley Road has 2.6 million square feet of mainly office space but a 20 percent vacancy rate. One of the first suburban business parks built in the Bay Area in the 1960s, city leaders are unsure if the park -- which still has major tenants such as Kaiser, Safeway and Del Monte Foods -- will ever again be able to attract enough businesses to fill its buildings. 

"I am concerned that we are waiting for it to come back and it can't," said Mayor Cindy Silva at an April 18 meeting. "There are inherent issues that make it not an ideal business park. Since we have no control over redevelopment ... the longer we wait, the harder it is to get it back on par."

City leaders are grappling with the park's future as they focus on economic development throughout Walnut Creek. And it seems they may see a future where Shadelands could become home to many uses -- think charter schools, a nursery, even a hotel. 

In a good economy, Shadelands does well. But when the economy isn't doing well, it struggles, said Rick Steffens, senior vice president with commercial real estate firm Grubb & Ellis, at the April 18 meeting. The park's challenges stem from it being a secondary market (that doesn't elicit high rents) that isn't adjacent to a freeway or mass transit and is older, he said. 

Steffens said. "You are always fighting that battle to compete with Concord and San Ramon."

Businesses usually choose Shadelands based on price. It rents for about $1.75 a square foot; other areas in Walnut Creek rent for $2.40 or $2.80, Steffens said. He suggests the city look at allowing other uses, such as residential and retail (including mixed use), especially since there are 23 acres of undeveloped land in the park.
"I am not sure that office space is necessarily the end-all for the Shadelands Business Park," Steffens said.
In the past, residential buildings in the business park have not seen much support, but council members now seem willing to look at anything. Silva said she could see senior housing as a good fit, because seniors would be near existing medical offices.
Other city staff members and council members listed ideas such as a winery, charter schools, more medical offices and a hotel. All of these would require land-use changes.
One highly visible undeveloped parcel, owned by Safeway, is at Oak Grove and Ygnacio Valley roads. City leaders suggested this could be an ideal location for retail, such as a nursery or a lumber store.
Safeway representatives were at the April 18 meeting but did not speak. Susan Houghton, a spokeswoman for Safeway, said in an email that the grocery giant is trying to understand the council's vision for the business park and that it was too soon to comment on specifics.
The office park is by no means crumbling. Major tenants have come to the park in recent years, including the Joint Genome Institute, which took over a remodeled Dow Chemical facility, and the Children's Hospital Oakland care center, which opened in 2009.
Council members said the Shadelands discussions are preliminary. Some wondered how surrounding communities would feel about Shadelands becoming less of a business park.
"At some point, we need to think really seriously about a Plan B as it relates to other uses," said Councilman Kish Rajan. "I am not in favor or against anything."
More discussion is certain. In the meantime, council members said they would consider pre-application projects for Shadelands on a case-by-case basis. This is similar to what the council recently did for a former co-op site on Geary Road; that land was designated for mixed-use, but the council changed it to retail so a grocery store could be built.
In the future, the city may create a precise development plan with built-in incentives for Shadelands, similar to what was done in the Mt. Diablo Boulevard-Locust Street specific plan.

Council members also stressed that they don't want to do anything to create an exodus from the park.

"Let's not bury this thing 6 feet under quite yet," said Councilman Gary Skrel. "There are a lot of people that we don't want to leave."

Bay Area News Group-East Bay is based in the Shadelands Business Park. 



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