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North Bay Business Journal

Monday, September 29, 2008, 3:00 am

Commercial Real Estate: A telecom original, Calix, casts around North Bay for space

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    Calix, among the group of startups that helped put Telecom Valley on the world map, has been putting out feelers in Rohnert Park and more seriously in Novato for relocation of the company.

    Petaluma city officials have reached out to the company about staying, according to Mayor Pamela Torliatt.

    “We’d love to have them stay here,” she said. “They’ve been here for quite some time and are part of the original telecom group.”

    Calix has been shopping for enough space to accommodate its current 80,000 square feet of offices and research labs at 1035 N. McDowell Blvd. plus room to grow, according to real estate industry sources. The company has considered the former Next Level Communications building in Rohnert Park, the former GreenPoint Mortgage building in Novato and Fireman’s Fund’s newly multi-tenanted third headquarters campus building also in Novato. Calix spokesman Geoff Burke declined to comment specifically on the company’s facilities plans but said it evaluates its needs regularly.

    Time will tell whether the company would go for the $1 million some estimate it would cost to relocate the company’s high-tech accommodations, work something out with current landlord RNM Properties or find suitable space among the ample options in Petaluma.

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    More financial services firms are lined up to relocate to the Napa Square office and retail development under construction at First and Franklin streets in downtown Napa early next year. Together with the first taker for ground-floor retail space, the 65,000-square-foot project already has 70 percent of the space reserved, according to Rodger Heggelund, managing partner of project proponent CDI Development and Realty.

    “We’re looking at a total renaissance on this end of town,” he said. “It will become a high-end financial center for downtown.”

    Pacific National Bank, a 121-year-old bank that has had a Napa branch for decades at 1300 First St., has leased 3,447 square feet, according to branch manager Renato Del Rosario.

    Retirement Capital Strategies, affiliated with the LPL Financial Services independent broker-dealer network, acquired Butler Investment Management in May 2005 and now has two wealth managers and two support staff at 3280 Villa Lane in Napa, according to Kent Kuhlmann.

    The Napa office will expand to nearly 5,000 square feet at Napa Square and is set to have a 30-seat videoconference center similar to one in the firm’s home office in San Jose for holding investor seminars and communicating with other advisers in San Jose and the other branch office in Danville.

    Also lined up to open in Napa Square by March 1 are Charles Schwab in 3,739 square feet, moving from 1700 Soscol Ave., and Wachovia Securities in 7,647 square feet, moving from 1400 Clay St.

    The first tenant in the 8,000-square-foot Wells Fargo Bank building as part of Napa Square being renovated for retailers is Spinelle Fine Jewelry in 1,000 square feet.

    Other Napa Square tenants already set to shift from elsewhere in Napa are US Advisors, CDI and MK2 Engineering.

    In addition, Morgan Stanley plans to relocate from 5,500 square feet at 1700 Second St. to The Riverfront office, residential and retail project set for completion next year along the Napa River. Combine these future vacancies with a string of consolidations and closures of real estate-related offices in Napa this summer, and the historically tight downtown Napa office market looks to be getting some breathing room.

    “In the next year there will be a lot of opportunities to upgrade space,” said Coldwell Banker Commercial Brokers of the Valley’s Cathy D’Angelo Holmes, who is marketing Napa Square.

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    Some tenants in the Safeway grocery-anchored Lakewood Village Shopping Center, one of two neighborhood centers totaling about 250,000 square feet in Windsor under common ownership, are worried that they are being priced out to make way for a makeover as an upscale lifestyle center, similar to what has been happening at a number of other North Bay properties.

    The centers are owned by U.S. retail property giant Kimco Realty Corp. of Hyde Park, N.Y. Kimco also owns Folsom Marketplace in Santa Rosa and Ukiah Crossroads in Ukiah.

    Fueling the speculation are the closure of the Blockbuster Video store in the center, shuttered in mid-September; a planned relocation of the adjacent Baskin-Robbins ice cream shop to the Town Green Village development on the west side of Windsor; and departure of a pet store next to Blockbuster. Also, Windsor Cleaners manager William Yi said he received notice to be prepared to relocate near the Longs drug store in the same center when pending leases are signed. A State Farm Insurance agent in the same center also is moving to the Town Green Village.

    Adding to the perception among some tenants are a few real estate-related darkened storefronts. Yet the similar-size Raleys grocery-anchored Lakewood Shopping Center across the street is virtually full.

    The centers were built in the 1990s and have passed through ownership of three real estate investment trusts. Western Properties Trust acquired Lakewood Village in 1998, Pan Pacific Retail Properties acquired Western in late 2000 and six years later Kimco acquired Pan Pacific.

    Laura Zanoni, who started Smoothie Cafe in a small space in the center seven years ago, was due to renew her five-year lease just after Kimco assumed ownership in late 2006. She said that the renewal rate was so high she just went to a month-to-month lease after that and has been facing three increases so far this year. She recently listed her business for sale.

    What she and other long-standing tenants in the centers are experiencing is the downside of state Proposition 13, which defers property-tax reassessment until a property sells, according to Armand Vasquez, vice president of leasing for Kimco’s Northwest region. He said there is no plan to convert the center to an upscale venue.

    “If you have good tenants paying rent why replace them for no reason,” he said. “There would be downtime in rent during construction.” He has been working with the Windsor shopping centers since they were owned by Western and sees a bright future for them.

    Kimco is negotiating with replacement tenants that could open in Lakewood Village early next year. Retail rents typically are priced on a triple-net basis, so increases in taxes, insurance or other expenses are passed along to tenants.

    With several North Bay shopping centers trading hands in the past year, tenants are facing increases of 50 percent to 75 percent in the tax portion of their adjustments, according to John Schaefer of Terranomics Retail Services.

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    Submit items for this column to Jeff Quackenbush at 707-521-4256, jquackenbush@busjrnl.com or fax 707-521-5292.

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