Parking rates in downtown San Rafael are up, so where’s the outrage? In October, the city boosted rates to $1 an hour on Fourth Street, and monthly rates jumped by $5. In any other city in Marin, the merchants would have gotten a petition together and stormed city hall with tales of a business apocalypse.
The difference is that downtown businesses know San Rafael is, for the most part, pro-business. A decade ago, Fourth Street was a virtual ghost town after 7 p.m. Now, the street is packed at night, string lights twinkle in the trees and the sidewalks are crowded with diners. Parking downtown is tough by Marin standards, though compared to San Francisco, it’s still relatively easy.
Downtown businesses are also cheered by the fact parking revenues and fines aren’t going to remodel the library or hire cops. According to Parking Services Manager Mark Miller, revenues don’t flow to the general operating account for the city, but rather go back into paying for debt service on a three-year-old garage, parking resource upkeep and personnel.
Another reason downtown businesses haven’t marched on Miller’s modest office is the city is starting a validation program where merchants can buy parking on a deep discount from the city and offer shoppers a validation that will shave up to two hours off their charges in any of the city’s trio of garages. The new program’s details are still in the works.
“We look at the increase as a way to actually boost the downtown economy by making better use of our parking resources,” Miller says. Part of the focus is to make long-term parking available to employees in different locations, freeing up meter parking for shoppers.
Musical office space
Stop me if you’ve heard this one before: The San Rafael Corporate Center has been sold. Again. That’s right, the 157,000-square-foot office park, which originally was to be the world headquarters of Fair Isaac, has been sold again. A joint venture between local partner Seagate Properties and Wall Street investor JP Morgan Investment Management acquired the 70 percent occupied buildings for $90.2 million. But the real value in the acquisition comes from the entitlements that will let the joint venture build three additional buildings and two parking structures.
The $90 million price tag is quite a jump from the $48 million Sterling American Property and Hines paid Equity Office Trust in 2004. It was part of a $239 million unstabilized package of five Bay Area buildings. Sterling and Hines bumped the occupancy by 20 percent and did some capital improvements in the two years it owned the property. At the time, Sterling and Hines were in talks with a possible tenant who was shopping for as much as 500,000 square feet. Seagate Managing Director Wik Polite says some talks have gone on, but no deal is imminent and, in fact, his joint venture plans on constructing the balance of the project beginning in February or March, regardless of any new tenants.
Maybe Seagate and JP Morgan will be able to get the true value out of the Second Avenue complex, because ever since Fair Isaac stiffed the city of San Rafael, the property has always been about potential rather than profit. In 1997, the city of San Rafael courted the software and credit company to build its campus downtown. The romance was hot and heavy for a while, as Fair Isaac made plans to construct an $87 million complex. But a new CEO at Fair Isaac believed the company’s future lay in Minnesota, writing the city a $2 million escape option check even as it looked for a buyer. The city took the cash and began to build its landmark plaza downtown as Fair Isaac went shopping, selling the land to Wilson Equity, which became Equity Office.
Seagate is a veteran of acquiring major properties with the help of deep pocket equity partners like pension funds Ohio State Teachers Retirement System and California Public Employees Retirement System. While the institutional players contribute the money, Seagate manages the buildings, doing everything from construction management to capital improvements to tenanting, earning fees along the way. Look for Polite and Seagate to ride herd on the construction of three four-story buildings that will add 240,000 square feet to the complex, as well as twin freestanding parking structures.
Seagate and JP Morgan see a five-year hold for the property from acquisition through lease-up to exit. By the time the joint venture is ready to take the complex to market, it may be the highest quality Class A space in the North Bay, but only if Polite and company can shake off the property’s spotty pedigree and fill the space.
Restoration hard times
What’s going on at Restoration Hardware? The Corte Madera-based retailer has hatched a new sales game plan and, in the process, sent 100 of its home office employees packing. The pink slip parade will save the national boutique hardware and furniture retailer $3.5 million this year, and $9 million next year.
The retailer was founded by Steven Gordon in Eureka, California, while he tried to restore a Queen Anne Victorian. Realizing vintage-looking drawer pulls and hardware were hard to come by, he started the company in the same house, selling antique-looking fixtures to well-heeled yuppies looking for style.
The trouble is, the company’s stock has been up and down like Rosie O’Donnell at an all-you-can-eat joint. After a splashy IPO in 1998, the company was almost belly up in 2000. It has since aggressively grown to 110 stores and eight outlet stores across the nation, including the flagship store in the Village Shopping Center in Corte Madera. The new vision is to add lines like Restoration Hardware Bed & Bath as well as Restoration Hardware Baby & Child. The company is trying to unkink its distribution network and is building a new distribution center in Ohio. We wanted to understand more about the new strategy to move the company out of the red and into the black, so we called a couple of times.
We’re still waiting to hear back.
