"When it became clear that the oversupply of office space in Silicon Valley would prevent new office construction for several years, we worked with the City of Fremont to re-entitle a significant portion of our office space entitlement to allow for a product type that can be absorbed much sooner," says Catellus CEO/chairman Nelson Rising in a prepared statement.
On the heels of this week's approval, Catellus says it has executed two ground leases for land that can accommodate approximately 260,000 sf of retail space--with Kohl's Department Store and Lowe's Home Improvement Warehouse--and has under negotiation or out for signature additional ground leases and build-to-suit leases representing an additional 250,000 sf of retail development. The company did not return a phone call seeking more information.
"We expect that we will enter into long-term ground leases for well over half of the re-entitled land with minimal capital investment in the build-out," says Rising. "When fully completed in late 2005, all of the new ground and build-to-suit leases are expected to contribute $7-8 million of FFO annually."
Infrastructure work is slated to begin in the fourth quarter, such that lessees will be able to complete and open their stores by the end of 2004, says Rising.
Earlier this month, Tejon Ranch Co. said Catellus has executed a purchase option for an 80-acre site at the Tejon Industrial Complex, a 1,500-acre development at the intersection of Interstate 5 and State Highway 99, approximately 65 miles north of Los Angeles.
The option "will permit Catellus to actively market its position at the complex," according to Charlie McPhee, SVP of Catellus' Southern California region. McPhee cites the location just north of Los Angeles County and the convenient access along major interstates and highways as reasons for the company's interest in the site. He also notes that, unlike in most of the fully developed industrial markets in and around the Los Angeles metropolitan area, Tejon can accommodate super-sized distribution warehouse facilities and is within 110 miles of the ports of Los Angeles and Long Beach.
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