Cupertino Revises General Plan to Allow for Additional Office Development

Bay Area, Cupertino, Silicon Valley, CBRE Capital Markets’ Debt & Structured Finance, San Francisco, Sand Hill Property Company, HSBC Bank USA

Cupertino The Registry real estate

By David Goll

Cupertino’s City Council recently approved General Plan amendments that would include adding a commercial option to a parcel occupied by technology company Mirapath Inc. now zoned only for industrial and residential use.

The changes alter the zoning for the Mirapath property at 10950 N. Blaney Ave., adjacent to a facility operated by Pacific Gas and Electric Co., from the current industrial/residential to industrial/commercial/residential. Tiffany Chen, a Mirapath spokeswoman, said the company is not seeking to add height or greater density to future development on the site, but wanted the option of adding commercial uses.

[contextly_sidebar id=”8i85sjuRGSQ613xoYjuF8FiUMULaOKlh”]The council also mulled potential ballot measures to allow residents to weigh in next year on both whether to build a new civic center for an estimated $70 million, as well as dramatic changes proposed for struggling Vallco Shopping Mall by owner Sand Hill Property Co., a Menlo Park-based development and real estate investment firm. One option would be putting an advisory or binding referendum on the June primary or November general election ballots regarding Sand Hill’s plans to turn the conventional shopping mall into a hybrid development featuring 625,000 square feet of retail and entertainment, 800 apartments, 2 million square feet of office space and a 30-acre community park.

The proposed $3 billion Hills of Vallco development has stirred controversy in this affluent city, where its nearly 60,000 residents have a median household income of $145,000. One of the main issues among residents is fear of worsening traffic congestion resulting from additional office development, already heightened by the nearby construction of Apple Inc.’s new circular “spaceship” campus with 2.8 million square feet of space that will house 13,000 employees.

During a public hearing, Cupertino resident Stacy Wilson told council members many of her fellow residents object to Vallco being rezoned from retail to office use, and she supports a binding vote on a project that some have estimated could attract as many as 10,000 workers.

A decision on the timing and format of a vote isn’t expected until an environmental impact report on the project is completed by July or August, making the November vote more likely. Council Member Darcy Paul voiced his support for a vote coinciding with the November 2016 general election because it would be less expensive.

“Personally, I think our five [City Council members’] opinions on these matters are not as important as those of our residents,” Paul said.

Sand Hill bought Vallco for $320 million in late 2014, as was first reported by The Registry. Despite its seemingly strong location on 50 acres at North Wolfe Road and Stevens Creek Boulevard, Vallco has floundered. The formerly tony Vallco retail center, built in the 1970s, has suffered in recent years due to its proximity to the popular upscale shopping destinations of San Jose’s Westfield Valley Fair and Santana Row—about five miles to the east—and Palo Alto’s Stanford Shopping Center 15 miles to the west. This year alone, Vallco lost two of its anchor tenants when Macy’s and Sears closed their doors. JCPenney is the only remaining anchor.

The mall’s ownership changed six times over the past 16 years, said Mike Rohde, who has been Vallco’s general manager since 1998, and various developers have tried to revitalize the property to no avail. Vallco went into bankruptcy followed by foreclosure in 2008.

“It’s been hard for that location to be a regional pull on its own,” said Tom Nelson, a vice president of retail properties at real estate brokerage Colliers International in San Jose. “The layout of the mall is a bit dated. It needed a lot of TLC and financial strength to give it a new life.”

“A number of things were proposed over the years but no one has had the secret sauce to get it all to move forward,” Nelson said, adding that the property would be “perfect” for a mixed-use project. Sand Hill’s experience in the area will be helpful, he added. “[Sand Hill] has demonstrated they’re not afraid to do something that’s challenging.”

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