Office Park Gives Way to Wal-Mart

OAKLAND, CA-A 250,000-sf retail development anchored by Wal-Mart will rise on 22.5 acres at the Northwest corner of Interstate 880 and Hegenberger Road, where once was planned a one-million-sf office development.San Francisco-based Simeon Commercial Properties tied up the former Port of Oakland property in 2000. At that time, it envisioned Metroport, a cluster of high-rise office buildings totaling one million sf. The market changed dramatically, however, such that an office development on the site would not be viable for years to come. They began focusing on retail.Simeon and Raleigh, NC-based Cherokee Investment Partners paid $15 million for the property last June and held a formal groundbreaking ceremony this week. The company’s VP of retail development Rajiv Parikh tells GlobeSt.com that leasing has been strong. In addition to a 147,000-sf Wal-Mart, Panda Express and In-N-Out Burger have lease two street-front pads while in-line space has been leased to Starbucks, Payless Shoes, Electronics Boutique and T-Mobile. Parikh says there is one in-line shop space left to lease and negotiations are under way for another 50,000 sf of development on an adjoining 6.5-acre parcel. One restaurant has been programmed in and the rest of the property will be filled with two or three mid-box retailers, says Parikh. Wal-Mart and all pad tenants are on long-term ground leases.Simeon develops and acquires retail, office, tech, R&D and mixed-use properties in strategic in-fill locations throughout the San Francisco Bay Area. It also provides third-party leasing, asset and property management services. Cherokee Investment Partners is a real estate private equity fund.Including the cost of the land, the total development cost of the buildings is about $50 million. Parikh says groundwork alone will cost $6 million, including storm water-related improvements and the cost of filling replacing wetlands.