Published February 23, 2017
Volume 1, Number 2
Pleasanton Continues to be the Right Address for Business
By Pamela Ott
City of Pleasanton Economic Development Manager
As we look around Pleasanton, the signs of a robust economy are evident. There are companies constructing new buildings – certainly a reflection of their commitment to a Pleasanton location – along with several residential projects as well as a host of tenant improvement activity for existing firms and businesses new to the city.
Of course, economic vitality is not only measured in building activity. Sales tax revenues have returned to pre-recession levels, our employment base has increased, hotel occupancy and rates from which transient occupancy tax or ‘hotel/motel tax’ revenues are being returned to the city, and many of our companies are reporting their own positive results, as just a few examples. The number of jobs has again topped 56,000 across all employers in the city and the revenues from more than 9,800 business licenses – based on gross receipts – were at their highest at $3.7 million for the fiscal year.
In Pleasanton, our economic development activity offers tangible evidence of financial achievement and a strong local economy. Pleasanton Mayor Jerry Thorne acknowledged this in his recent State of the City address: “We have a very healthy economy, thanks in large measure to careful planning, strong fiscal management, and a robust business community. Pleasanton companies contribute close to 60 percent of our revenues and serve as an economic force that continues to attract highly skilled workers to our region.”
The story of Pleasanton as an excellent location for business is well supported by our numbers: Pleasanton’s economic health is strong as the city’s commercial office vacancy rate dropped at the close of 2015 to 6.3%, down from 8.8% at year-end 2015, which is quite noteworthy when compared to a 16.4% vacancy rate just a few years earlier at the end of 2013. Our companies have definitely taken advantage of the improved economic climate. Expectations are for continued progress with more tenant migration from the inner East Bay, San Francisco and Silicon Valley to the Tri-Valley to enjoy lower rents for high quality office product, ample parking, transit access and proximity to workforce.
A significant contributor to this decrease is the reinvestment in Rosewood Commons, resulting in a change from approximately 10% occupancy at Swift Real Estate’s purchase of the property in 2014 to a nearly fully-occupied campus (7% vacancy) today. What is equally compelling about this center’s transformation is that many of the current tenants were started right here in Pleasanton – including ServiceMax, EllieMae and SmartZip - and this repositioned center provided the ideal space for them to grown and remain in our city. These firms are in good company as Cisco Systems signed a lease followed Zeltiq Aesthetics’ lease of nearly 110,000 square feet already with an eye toward additional space to accommodate the company’s anticipated expansion. With the February announcement of Zeltiq’s purchase by Allergan, we’ll look to welcome a new name to the Pleasanton business community.
Adding to this narrative is a flurry of activity as new business tenants and expanding firms moved into available commercial space throughout Pleasanton, allowing property owners and landlords to realize rising property values.
Much of this movement is in Hacienda, where the park’s 650 companies that locally employ approximately 18,000 people represent the best and the brightest of contemporary corporate America. A few examples: Robert Half International leased 28,634 square feet at Britannia Business Center as the company affirmed its place in the Pleasanton business community; long-time Pleasanton tenant Acosta leased 27,532 square feet in Hacienda, moving from its well-known location in Bernal Corporate Park; Neotract renewed its Hacienda location in 28,823 square feet; and venture capital backed Steelwedge Software, which offers cloud-based integration of business planning solutions, grew into 17,451 square feet of space. Roche Molecular Systems also solidified its long-term presence in the city as it leased 35,910 square feet and started construction on a new 70,000 square foot administration building to add to its campus.
The strength of Pleasanton’s commercial market has been further demonstrated in other business hubs across the city. Workday remains in continued expansion mode in the Stoneridge Shopping Center area, taking yet more square footage at two buildings at Pleasanton Corporate Commons followed by its leasing an additional 59,276 square feet building from Safeway with an option to purchase. Subsequently, Workday purchased a 205,051 square foot former Safeway building in the Centerpointe office campus directly adjacent to the West Dublin/Pleasanton BART station to provide immediate expansion space for the company. And none of these transactions altered Workday’s plans to construct a new 410,000 square foot headquarters building which was entitled in early 2016 and is currently under construction and scheduled to break ground in late 2017. This outstanding project includes traffic, pedestrian and design site improvements to the area creating an entryway to the BART station and a share BART/Pleasanton police substation in the parking garage. In the same area, Blackhawk Network leased 148,902 square feet, which is the entirety of one of the four buildings that comprise Pleasanton Corporate Commons. As a reflection of the heft of Pleasanton’s information technology cluster, a San Francisco Business Times list identified that five of the Bay Area’s largest software companies are based in Pleasanton: Workday, Ellie Mae, SmartZip Analytics, Veeva and Rimini Street.
Bernal Corporate Park offered equally significant contributions to Pleasanton’s market activity, in particular adding to the emerging cluster of biotech companies in that business park. 10X Genomics leased 16,854 square feet; Purigen Biosystems leased 16,165 square feet; Spirometrix leased 6,683 square feet, Solta Medical leased 7,442 square feet, and Unchained Labs expanded into 34,997 square feet, taking the entirety of the building it is in. Adding to the recent investment in this commercial area, Bay East Association of Realtors purchased a 17,157 square foot building for $309 per square foot, setting a peak for an owner/user purchase. As a result of such transactions, at the end of the 2016 vacancy in the office/flex product sector was at 3.7% compared to 5.4% one year earlier.
With an eye toward creating new development opportunity, implementation of the Johnson Drive Economic Development Zone program continued. This conception of this pilot program was prompted by the sale of the former 14-acre Clorox Tech Center as the city recognized the need for flexible zoning and other accommodations to promote reinvestment and redevelopment within this area on Johnson Drive along I-680. In 2016, city staff completed the required environmental work as well as additional economic and transportation impact analysis based on community feedback. This process carried on throughout the year as a ballot measure to limit the size of individual building footprints within the zone was not successful, thereby allowing the proposed zoning changes to include warehouse retail and other large format retailers along with hotels/lodging. The project will be considered by the Planning Commission and City Council in early 2017. Approval of the project would likely bring a development application shortly thereafter.
Pleasanton maintains its retail position within the Tri-Valley with sales tax revenues exceeding previous a high point at more than $24 million for the 2015-2016 fiscal year. With an inventory of almost 3 million square feet of retail space, vacancy remains low at below 10% which still allows some room for new additions to meet the community’s ongoing demand for retail. Despite its 30+ years, Stoneridge Shopping Center remains successful in serving the regional market and throughout the year opened several new stores, restaurants and services to offer more reasons for patrons to visit often and stay longer. Shopping centers within the city are benefitting from investment by property owners and tenants; one notable example is a preliminary application by Equity One to renovate Pleasanton Plaza to take advantage of the increased commercial activity around Stoneridge mall.
A new 112,000 square foot community shopping center – Pacific Pearl – was entitled in early 2015 and is now under construction for a mid-2017 completion. The center will be anchored by 99 Ranch Market and will also include a complement of 20-30 restaurants, retail, and service businesses; the center is currently about 50% leased. Pacific Pearl will attract local shoppers from across the Tri-Valley as well as the more than 7 million annual visitors (in 2015) to the adjacent San Francisco Premium Outlets in Livermore.
Activity among Pleasanton’s auto dealerships continued throughout 2016. At Pleasanton Auto Mall, upgrades to the Mini and BMW facilities were completed and the new 83,000 square foot Lexus showroom and service facility saw the start of construction. On the Staples Ranch site, both the Chrysler Jeep Dodge and CarMax dealerships are open and returning robust sales tax revenues to the city. City staff continues efforts to attract additional auto dealerships to the remaining auto mall-zoned portion of the property (approximately 15 acres), although competition between neighboring cities for brands unrepresented in the Tri-Valley is very stiff.
The current retail vacancy rate in downtown Pleasanton is less 10% with a handful of Main Street locations available as a few key property owners focused on repositioning and redeveloping their tenant spaces. Well received by the community, the Pastime Plaza project serves as a positive example of private redevelopment and a template for similar future projects. Several new establishments joined the downtown scene adding to the collection of distinctive downtown gathering spaces: Inklings Coffee opened in the formerly vacant Round Table Pizza space, Peet’s Coffee and Tea opened to much anticipation in the space vacated by the closure of Tully’s Coffee, wine and tapas bar Pairings Cellars slotted into an inline space on the southern end of Main Street, and Beer Baron successfully replaced the former Redcoats Pub. The coming soon list includes Rita’s Italian Ice and Andy & Yu’s on St. Mary Street, and Pruf restaurant in the former Stacey’s space – whose proprietor is the owner of Oakland’s popular Picán restaurant.
Other neighborhood centers are seeing similar activity. After a long-term vacancy, the former Borders space was occupied by Party City which moved across I-580 from Dublin’s Hacienda Crossing shopping center. In the space next door, which was vacated by the closure of Sports Chalet, Orchard Supply Hardware just opened in January. Now that OSH has opened, the Metro 580 shopping center is fully occupied for the first time in several years. Also owned by Brixmor, the Rose Pavilion shopping center is preparing for a façade update that will help to showcase the center’s existing and new tenants. Joining the center’s mix, a drive-thru Starbucks is already under construction, Total Wine and More will soon start tenant improvements on the space previously occupied by Long’s/CVS, and Trader Joe’s will be moving from its Pimlico Drive site to the space vacated by Fresh & Easy (which thankfully offers a lot more parking).
From residents who have seen the city grow over many years and want to age in place, to the next generation workforce as they start on their careers, to the families whose children are still in school, we want Pleasanton to be a city which all can call home. To achieve this, having a sufficient supply of housing across a range of types and prices is essential.
We’re now seeing the outcomes of the city’s 2012 rezoning of nine sites to accommodate multi-family housing as several of these sites have completed or are currently in development. Hacienda has already welcomed new residents to the Anton Hacienda multi-unit development on West Las Positas Boulevard, and just a short way along West Las Positas Boulevard at Willow Road the 94-homes Andares project is under construction. Two connected transit oriented development projects being developed by Essex are well underway from BART in Hacienda. The Galloway at Owens will add 255 apartments including a number of live/work units as well as retail space, while the Galloway at Hacienda will provide 251 apartments when completed, both complemented by a new neighborhood park. At the south end of Valley Avenue, Township Square already has residents in some of the 97 homes as work is almost completed on the 210 apartments. Proximity to the nearby Pleasanton Gateway shopping center, Bernal Community Park and main transportation thoroughfares bring added value to this development. At the other end of Valley Avenue, at Stanley Boulevard and Bernal Avenue, the 345-apartment Vintage development has already opened some of the 39,000 square feet of retail for those traveling through the east side of Pleasanton. Each of these projects includes units that are designated for affordable housing.
Another important project is the long-planned redevelopment of Pleasanton Gardens and Kottinger Place senior housing units into a new 185-unit Kottinger Gardens. This project is the outcome of a years-long community task force that sought to address the tremendous need for affordable housing among the growing population of seniors. Phase I is currently under construction and as residents move back into the 131 rental apartments, phase 2 will be started to add an additional 54 apartment homes. Recently approved by the City Council is the Irby Ranch residential development project along Stanley Boulevard, north of downtown. In addition to amenities such as extending Nevada Street to First Street for better circulation, improving the trail along the Arroyo Del Valle, connecting infrastructure to better serve nearby residents, and preserving Zia house, the project also allocates 1.64 acres for Sunflower Hill to create a 30-unit community to provide housing for special needs adults. Not only do projects such as these provide updated housing but they demonstrate the community’s commitment to support first-time home buyers and some of our most vulnerable residents.
As a way to broadly inform residents and businesses of all the development activity in Pleasanton, the city’s Community Development Department has recently created a bi-monthly newsletter that provides project location and status along with contact information for all significant projects across the city. The newsletter update is available on the Community Development Department page on the city’s website at www.cityofpleasantonca.gov/gov/depts/cd/
Economic Vitality Committee Initiatives
Contributing to our city’s economic success, the Economic Development Strategic Plan was developed through the work of the Economic Vitality Committee (EVC) and adopted by Pleasanton City Council in 2013. This plan guides the city’s efforts in maintaining a business-friendly environment to attract and retain companies.
A key action identified in the plan is to solicit feedback from business in Pleasanton, with a particular interest in learning where improvements might be recommended. To this end, in 2015 the city working with guidance from the EVC conducted a second business needs survey as follow up to a 2012 baseline survey. Results of this research indicate businesses in Pleasanton are generally very to extremely happy with their location. As in 2012, 91% find the community an excellent or good place to do business citing the city's positive environment, convenient and central location in the region, and friendly people including customers. And more than nine in ten businesses anticipate they will still be in Pleasanton two years from now.
One area of inquiry in both the 2012 and 2015 surveys was to test the perception that the City has rules and regulations that can make it challenging either to develop a new business or to accomplish objectives as established business. In 2015, the majority of businesses responding to the survey favorably rated the permitting process in particular to be very or somewhat easy; moreover, this majority increased from 51% to 63% over the three years. A key takeaway: the City has made progress in easing the process for companies to open and expand in Pleasanton.
Addressing the Future
As the City of Planned Progress, looking ahead and planning for the future is an integral part of our culture. Managing resources that ensure long-term sustainability for the community is of critical importance to our businesses, and several such efforts were addressed or achieved in the past year.
Water is at the top of everyone’s list. In Pleasanton we exceeded the state mandate of a 25% reduction water consumption. To proactively address future demand, the city completed the region’s largest retrofit of a recycled water network – purple pipes as they’re often called – to deliver more than 450 gallons of recycled wager per year for irrigation. The result is a 10% savings of our potable water supply. At the same time, the city is automating a majority of outdated water meter infrastructure so that consumers have the ability to better control their water consumption.
The city continues to put considerable effort on finding solutions to help address some of our transportation and traffic issues. As one example, through our regional efforts the I-580 express lanes opened last year and recent review indicates that travel time has improved considerably along the 11-mile stretch. The city also takes a comprehensive approach to circulation within its own limits. While the spotlight is intensely focused on traffic circulation for automobiles, so that residents and workers alike can travel to and from where they need to be, the city’s Pedestrian and Bicycle Master Plan is an important part of the equation. Over the past year, city staff has been working to collect data and input to update that plan which is anticipated to be presented to the City Council in mid-2017.
In 2016, a Civic Center/Library Master Plan Task Force met to create a plan for the future of the city’s civic center, library and police station, so that the needs of current and future residents can be addressed in a center that’s reflective of Pleasanton’s progressive and robust community spirit. That project laid the groundwork for an initiative that will shape the future of downtown: an update to the Downtown Specific Plan. A 10-member task force has been appointed to guide this effort, but community input will ensure the plan reflects the interests of all those that work and spend time in the heart of our community. Through the PtownDtown.org website, anyone interested can access all the materials and information, offer their opinion and perspective through several online surveys and mapping tools, and sign up to receive ongoing updates throughout the process.
Pleasanton’s economy and business environment is healthy and growing. Located at the crossroads of Interstates 580 and 680, we are home to both start-ups and Fortune 500 companies. We have all the attributes for business success thanks to a highly educated and skilled labor pool, proximity to major markets, access to BART, excellent schools, a thriving arts community, a charming historic downtown, an engaged community of citizens and business leaders, and a progressive outlook that listens and responds to the needs of our corporate community.
So when our community is acknowledged for being an excellent place – such as being included among the 2016 Best Suburbs to Live in California by data ranking and review company Niche.com – we know it’s the result of all of these efforts. Thanks to valuable partnerships between the City of Pleasanton and such organizations and individuals as the Chamber of Commerce, members of the Economic Vitality Committee, and the Pleasanton Downtown Association, Pleasanton continues to be the right address for business.
Published February 23, 2017