Record-Breaking Army Land Exchange Advances Bay Area Development
- Apr 12, 2011
April 11, 2011
By Barbra Murray, Contributing Editor
With the signing of the largest-ever Reserve Property Exchange Agreement, the U.S. Army paved the way for SunCal Co.’s development of a master-planned community, Dublin Crossing, on 180 acres at Camp Parks Reserve Forces Training Area in Dublin, Calif. In return for the land, SunCal will build 152,300 square feet of new buildings for the military.
Camp Parks is located near the intersection I-580 and I-680 in the Tri-Valley region, east of San Francisco and 20 miles east of downtown Oakland. In 2008, the Army issued a notice of availability, offering to convey fee title to the land at the sprawling site, and in a highly competitive selection process, SunCal emerged victorious. The Exchange Agreement is a win-win situation; it allows SunCal to secure land without plunking down cash or securing financing for it, and it presents the Army with the opportunity to have new military buildings developed at no cost to taxpayers.
On the Army’s behalf, SunCal will develop a 4,300 square-foot administrative building to accommodate the base police staff; a 33,000-square-foot regional medical training facility; a 42,000-square-foot Army Reserve Training center; a 40,000-square-foot public works/logistics warehouse; and a 33,000-square-foot maintenance support facility.
And with 180 acres to play with, SunCal will develop Dublin Crossing, a transit-oriented, mixed-use project just a hop, skip and a jump from a Bay Area Rapid Transit, or BART, station. The behemoth destination will encompass 1,500 residences, as well as several hundred thousand square feet of retail, office, hotel and industrial product.
SunCal expects to commence construction of the military properties within the next two years, and kick off development of the mixed-use Dublin Crossing within the next three years.
The commercial real estate market is on the road to recovery, but it is far from full recuperation. Thus, the number of developers tackling gargantuan projects like Dublin Crossing is limited. SunCal is clearly undeterred by the present condition of the market. And, like many a developer in the high-flying days of 2007, SunCal is operating, to a certain extent, on the ‘if you build it, they will come’ concept. “We’re very confident about the San Francisco Bay area,” Joe Guerra, consultant for acquisitions and entitlement with SunCal, told CPE. “There is existing demand for housing in what is a limited market.”
But beyond single-family housing, the issue of demand is murky at the moment. “The city may think that they overbuilt in the condominium market and on the retail side, there are several developers ahead of us,” Guerra said. “If we were to build today, we don’t think we’d have anyone lining up.”
The development of Dublin Crossing is, like most endeavors, all about timing. “We are working with the city to size the project according to demand,” he says. “We will do a master plan for the entire site, and when we’re developing that pan, there will be studies with the city on just what is the demand. How much demand exists for retail; how much demand exists for office. There will be an 18-month window during which we will determine how much non-residential project will be needed. But we’re trying to have a plan that is not only driven by the market within the next 18 months, but will have flexibility in case the market changes.”
SunCal has another military-related project underway in California. The company recently demolished the last remaining structure–an 11-story hospital building–at the former Oak Knoll U.S. Naval Medical Center in Oakland to make way for the Oak Knoll master-planned community, which will feature 960 homes of mixed types, 82,000 square feet of office and retail space and 50 acres of parks and open space.
The public-private partnerships SunCal has established with branches of the U.S. military are, indeed, unquestionably valuable to both parties. In the case of Dublin Crossing the partnership is particularly valuable to the public side of the joint endeavor. “If the Army sold us this piece of property and we wrote them a check, that money would go to the Treasury, but because the deal is structured as an exchange, there is an incentive for the Army to use the land to get new buildings,” Guerra notes. “This is a very unique public-private partnership. Now that the template is in place, it would make sense for a whole lot of other bases, most of which have a lot of land, to benefit from such a partnership.”