Monday, October 22, 2007

Vallejo pushes forward on development 7 million square feet to become available at Mare Island project

Back Article published - Oct 22, 2007

COMMERCIAL REAL ESTATE: Vallejo pushes forward on development
7 million square feet to become available at Mare Island project
BY Jeff Quackenbush

VALLEJO -- Sonoma County property owners could face serious competition in the next few years for the typical northward expansion of companies from Marin County as the city of Vallejo gets serious about replacing several thousand jobs lost when the Mare Island Naval Shipyard closed a decade ago.

Banking on its new speedier access to interstate highways 80 and 680 via a Highway 37 bypass through the city, high-speed ferry access to San Francisco and hundreds of millions of dollars of downtown and Mare Island redevelopment planned over the next decade, city boosters and redevelopers are marketing their offerings to Highway 101 corridor companies in the North Bay.

Lennar Mare Island, the master developer of the island and a joint venture of Miami-area companies Lennar Corp. and LNR Properties, envisions 7 million square feet of industrial, office and retail space plus 1,400 homes on 650 acres of the island at full transformation.

The developer has spent more than $100 million in the five years it has had control of the property on upgrading the 100-year-old infrastructure, cleaning up decades of contamination and rehabilitating 2 million square feet of existing Navy buildings for reuse as offices and heavy industry, according to spokesman Jason Keadijian. Some 80 companies employing 1,800 people occupy virtually all the converted space so far.

Coming in mid-2008, Lennar plans to start selling 23 parcels in the 83-acre Mare Island Town Center tentative map with a total of 800,000 square feet of office and retail space the city Planning Commission approved in August.

"In the past year, we have had 15 to 20 inquiries from business or real estate brokers from Marin looking for manufacturing, office and research space," Mr. Keadijian said. "We're currently working with a couple of Marin businesses looking to relocate to 15,000 or 20,000 square feet."

Some Marin tenants outgrowing the limited amount of space in the county and priced out of the market may consider Vallejo or the East Bay for back-office functions of professional services firms and production space, according to Peter O'Brien, an Orion Partners commercial real estate broker focused on Sonoma County.

He's optimistic the historical Marin-to-Sonoma migration will continue, but he's concerned the increasing competition will require brokers representing properties in Petaluma and northward to market more heavily to Marin companies. He said a number of executives have told him they have been considering an eastward move.

"Highway 37 is a relief valve for Marin," Mr. O'Brien said.

However, Orion President and CEO Bill McCubbin, who has noted the movement of 2.5 million square feet worth of tenants from Marin to Sonoma County in the past 15 years, said any eastward migration would likely go to Point Richmond at the east end of the Richmond-San Rafael Bridge on Interstate 580 before Vallejo because of the commute.

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