$200M development at Millbrae BART goes full steam ahead (Video)

Article Source: San Francisco Business Times

About 6,000 people pass through the Millbrae Caltrain and BART station each day, making it the largest intermodal terminal west of the Mississippi River. At the Millbrae station, planes, trains and automobiles whir by all day with San Francisco International Airport and Highway 101 next door. But no one really stops to look around because there’s not much to see. The station’s economic potential is stalling on the tracks for the 22,000-person city that has floundered financially.
Plans to turn those fortunes around, however, are gaining steam.

San Jose-based Republic Urban Properties, which won the rights to develop on the BART-owned 10 acres around the station last year, started meeting with neighbors this week on a $200 million project that would bring 300 apartments, 43,000 square feet of retail, a 110-room hotel and 150,000 square feet of office space that could cater to a technology company looking to make a move.

Bike paths, green space and pedestrian pathway will take shape where parking spaces now reign. The project will take at least five years to build out once the city approves an update to the plan for the area around the BART station.
“You’ll be able to see an urban center with everything in it,” Michael Van Every, president and managing principal of Republic Urban, said. “At the end of the day, it’ll be a destination. Right now, it’s a parking lot and transit use. In 10 years, it’ll be everything you want in any urban city — shopping, recreation, living and of course, working.”

A lot is riding on the project. For one, the city of Millbrae lacks any kind of major employer and has seen slipping sales taxes that continues to dent its budget. The kind of tax revenue that a hotel would generate would be welcome news to the city, Van Every said. (Those hotel taxes already represent the second-largest source of revenue because of hotels that line the airport, according to the city’s annual report.)

Plus, the redevelopment project is one of the largest in a recent string of sites that BART has tried to transform from dull parking lots into transit-oriented development hubs. Joel Keller, president of the BART board, said new developments that are in the wings on sites like Millbrae, Lake Merritt and West Oakland will help pad the agency’s budget by adding ground lease dollars and increasing the number of riders.
“We want to create a place, not just popping out a big apartment complex or office building, but creating a space that provides interest for people,” Keller said.
BART will still need to greenlight Republic Urban’s project next year, once the developer gets more specific. Republic Urban also needs Millbrae to approve an amendment to its 16-year-old development plan for the 116 acres around the BART station that dictates what can get built on the site.

If all goes as planned, the project won’t be the only one that improves the surrounding area. Local property owner Vincent Muzzi also controls a swath of land nearby that will be zoned under that city development plan. He is planning 270,000 square feet of office space, 32,000 square feet of retail and 500 residential unit , said Millbrae’s community development project manager Marty Van Duyn. Muzzi did not return a request for comment.
Van Every projected that Republic Urban will break ground next year and finish by 2020.
Critical to these grand plans, of course, is the whether a major company would be interested in renting the 150,000 square feet of office space. While squeezed office space in San Francisco has widened developers’ eyes across the Peninsula and East Bay, Millbrae doesn’t have much of a track record of attracting big-time tenants.
Last week, Reddit’s CEO said he stepped down from the company after sparring with its board about a proposed move from San Francisco to suburban Daly City.
Other San Mateo County cities have already had success by building new retail, entertainment and housing to complement the office space that tenants are gobbling up. Farther south in the county, Redwood City and Menlo Park have already become the kinds of destinations Millbrae wants to grow into.
But there are no guarantees that investing in amenities will lure office tenants. Bay Meadows office buildings, part of a gargantuan development project in San Mateo, started construction this year without having a tenant in the bag. Van Every said there’s been some “immediate interest” from tenants, and added that he wouldn’t want to start construction on spec.
Tim Grant, a commercial broker who works on the Peninsula for Avison Young, said he’s bullish about the Millbrae project despite higher vacancies and fewer big companies in northern San Mateo County cities like Millbrae, San Bruno and Burlingame. He said while a Millbrae address doesn’t have cachet yet, “this site has success written all over it, because it’s next to BART and Caltrain. I truly think you’re going to see a tech tenant come 30 miles in either direction and land here because it’s a great middle ground between San Francisco and Silicon Valley.”