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New Appeals Threaten to Stall Sunnyvale Town Center Redevelopment For Years

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An earlier Pau suit against the bank, which the court dismissed, was appealed in September 2011. No date for oral argument in that case has been set, Rossi said in a Feb. 19 letter to the bank’s attorney.

The 19-acre Town Center redevelopment is ultimately planned to have nearly two million square feet of housing, retail, commercial, parking and infrastructure development, according to public records.

Despite the well-publicized lawsuit, the Sunnyvale downtown is gaining halting momentum, aided by its proximity to a Caltrain station. Nokia Inc. and Apple Inc. occupy the Town Center’s two, 156,000-square-foot office buildings. Domain-naming company Go Daddy.com recently opened a more than 8,000-square-foot office in the Sunnyvale City Center nearby—and said it intended to grow.

Jon DeCoite, a vice president for Cassidy Turley Commercial Real Estate Services, said the lawsuit and the unfinished buildings had not hampered leasing at downtown Sunnyvale’s Murphy Square. The 43,000-square-foot office complex is across from the Caltrain station and near downtown’s Murphy Avenue, which is largely lined with locally owned restaurants. The transit and amenities both drive office occupancy, he said.

“We are at $4.25 [a square foot] full-service [rent], and we are doing deals at very close to our asking rate. A few years ago we were at $2.25 [a foot] full service, and our occupancy has increased,” he said. “It’s hard to say there has been a negative impact by the Town Center not being complete.”

Michael Fox, president and chief executive of Goodwill Industries of Silicon Valley, said that after several tough years the nonprofit’s downtown Sunnyvale store performed well in 2012, with sales up more than 14 percent compared to 7 percent for its 18 stores overall.

The organization is remodeling the 8,000-square-foot Sunnyvale store in anticipation of increased sales opportunity as the downtown population expands. “There will be a lot more people living there, and they will be renting, and we are pretty bullish about it,” Fox said.

Nonetheless, he said, parking is an issue, not only for shoppers but also for people trying to donate.

Indeed, parking has become a debilitating problem for Steven Askari, who has sought to redevelop a 13,000-square-foot parcel at 205 E. Washington Ave. in downtown across from the Goodwill site for a number of years. His current tenants, auto mechanics, are faring poorly. But the city council, acting consistently with city staff direction, has deferred a downtown parking-demand study for three years while the lawsuit lingers, so Askari’s redevelopment opportunities are limited.

“Clearly staff feels like they want the Town Center project further along” before a parking-demand assessment is done, said Sunnyvale Communications Officer Jennifer Garnett. The Town Center is a member of the parking district. “While the [Town Center] uses may be approved, we don’t know who the tenants will be. Depending on which tenants go in, you get a more complete picture of how the [parking] will be used,” she said.

Told the lawsuit’s resolution could be delayed another two years by the parties’ decisions to appeal, Askari said, “That is bad news for me.”

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