The Record Article
Grupe digs into campus redevelopment in Stockton

In the past 2-1/2 years, there has been a massive amount of work going into the redevelopment effort at the California State University, Stanislaus-Stockton Center, formerly home to a state mental hospital.

Thus far, most of it seems to be paperwork.

That is as expected, considering that the project involves not only a diverse partnership of private development, government and education but also a variety of agreements, planning documents and environmental studies, said Dan Keyser, senior vice president with Grupe Commercial Co.

Stockton developer Fritz Grupe signed on during the summer of 2001 to redevelop much of the campus into a mix of classroom, offices, retail, apartments and a community center. Grupe Commercial is master developer of the mixed-use project, dubbed University Park, and the city gave final approval to master development plans in November.

"There are so many people involved and so many environmental issues that needed to be mitigated," Keyser said. "We made sure we crossed all the t's and dotted the i's."

Coming attractions

But in 2004, many changes will become easily apparent to passers-by at the 103-acre central Stockton campus:

This spring, a main traffic entrance, with traffic light, will be cut into the north end of the campus at Harding Way and Grant Street. A roundabout and security hut also will go in at that entrance. (A longtime single access at California and Magnolia streets will remain open.)

Also this spring, decorative wrought-iron fencing will replace chain-link fencing along Harding Way on the north and along California Street on the west. (Iron fencing has already gone up along the railroad tracks on the east and by a residential neighborhood and DMV office on the south.)

As many as 32 buildings will be razed over a 12-month span, handled by a single contractor and demolished one or several at a time, perhaps beginning in April.

Nineteen historically significant buildings will be renovated.

How this will unfold, according to Keyser, depends upon how quickly space can be leased. The buildings typically have such hazardous materials as lead paint and asbestos, which must be carefully removed, he said.

Plus, some buildings need electrical, plumbing and heating and air-conditioning upgrades, he said.

Still, with minimal floor-plan changes, a renovation can be completed in three to six months, he said.

The company doesn't want to invest a lot of money in renovation up front for a building that may sit vacant, he said.

The work on the historical buildings that will be staying can progress quickly, Keyser said, and the renovation can proceed basically as a "renovate to suit" deal for any tenant.

Filling a shortage

"There's nothing easy bout the project," Keyser said. "But the strongest demand, other than education, will be for offices initially. We're very optimistic about the response we've received."

He said he believes there will be interest in space for medical offices because of the proximity of St. Joseph's Medical Center just to the north and interest also from architects, dentists, lawyers and other service professionals.

He said he expects interest also from back-office operations.

Demand for Stockton office space is high, because there's a shortage in the marketplace, said Shelly Cannon-Keely, a CB Richard Ellis broker who is representing several very large clients as well as smaller ones interested in University Park office space.

For example, the overall vacancy rate for office space in Stockton in the third quarter of last year stood at less than 3.5 percent.

She said that currently, there's no back-office potential, because rents in the Stockton area these days actually are more expensive than in many Bay Area cities, where space is really discounted.

"In conjunction with the Bay Area glut of excess office space, we are no longer considered a truly affordable area as we once were, as housing has skyrocketed," Cannon-Keely said.

She said her clients are thrilled about the University Park project -- "thrilled and can't wait."

Excited future tenant

One tenant already is lined up.

Creative Child Care Inc., a nonprofit group that provides day care for about 1,200 low- to moderate-income children, will be relocating one of its 16 centers to University Park in a couple of weeks and its administrative headquarters there from March Lane this summer.

The relocation of a nearby center will allow an expansion from care for infants and toddlers only to add preschoolers.

It's also a pretty sweet deal -- cheaper and an excellent setting, said Debbie Eison, executive director of Creative Child Care.

"I love Grupe's plans for the acreage," she said. "I mean the ambience is quite nice out here with the old buildings and old trees."

Plus, it's close to downtown and St. Joseph's Medical Center, has good traffic connections and can offer care to the kids of Stanislaus State staffers and students, she said.

Keyser said most of this year will be dedicated to demolition, traffic changes and fencing, and preparing the site for construction. There will be an estimated 350,000 square feet of new construction for office and retail.

Offices will have about 300,000 square fee of that total. The retail parcel, which will be on about 5 acres at the Harding Way entrance, will not be a strip mall or minimall type development, Keyser said, and will be built to reflect the architectural flavor of the historical buildings being saved on campus.

Space for education

The Stockton Unified School District has an agreement in principle with Grupe to build a K-8 elementary school on the south end of the campus, with the details of that deal being finalized this year, Keyser said.

"A little piece of retail, office and school could happen as soon as a year from now," Keyser said.

The company is still conducting a market study about apartments, so there's no feel yet for how the residential sector of the project could develop, he said.

The site served as a state mental hospital for decades until it was shuttered in the mid-1990s and turned over to CSU in 1997 for development as a Stanislaus State satellite campus. It was to be funded in part with a revenue stream from leasing out many of the buildings to government, businesses and nonprofit groups.

That effort was set back when consultants determined several years ago that about half the buildings available not then needed by CSU would require extensive renovations before they could be leased out.

Keyser said the project actually has proceeded relatively smoothly and quickly. Other Grupe Co. projects, which involve new construction and no demolition or renovation, typically take up to six years to get rolling, he said.

Two monster buildings on the north end of the campus were demolished last year, because thick concrete walls and small, restrictive floor plans made them impossible to renovate.

Grupe Commercial contracts out all of the construction work on its projects.

A small core of the campus is dedicated to CSU endeavors -- about 1,250 students take classes, mainly in the evening. The idea is that over many years, CSU will start absorbing some of that leased space back to accommodate growing enrollment.

Campus crown jewel

Part of the site redevelopment involves the renovation of what many consider the "crown jewel" on the campus: the Magnolia Mansion, which served as home to the hospital superintendent.

The CSU Stanislaus Foundation has been raising money to transform the old structure, eaten away at over several decades, not to mention dry rot.

Two external sides have been finished, and much of the intricate decorative trim has been duplicated to preserve its historical architecture.

John Phillips, president of the Interstate Truck Center and the CSU Stanislaus Foundation board president, said the campaign has raised about $400,000.

About $225,000 is going toward the external renovation, he said. The second phase will cost about $400,000 to renovate the downstairs -- including kitchen, living room and dining room -- plus, put in a heating and air-conditioning system and put on a new roof.

"Actually, that house has good bones," he said. "It's in pretty good shape."

Once the downstairs work is finished, likely by the end of the year, the place can actually start generating money when rented out for community events, Phillips said.

"There's a shortage of grand places like that to hold events," he said.

David Rosso, interim executive director of the Stockton Center Site Authority, said that with the master development plan and agreements in place, environmental studies done and the first significant site work ready to unfold this year, he's optimistic.

"But anyone looking at this must understand it's not a quick fix," he said. "It's a long-term investment on the part of all participants and stakeholders, so don't expect to see a built-out site overnight."

After all, the lease deal with Grupe Co. covers 50 years, he said. Development ultimately will depend upon the economy and the ability of Grupe to find the right mix of tenants.

"It's fair to say it's taken almost three years to get this far, and we're elated that we've made a significant step," he said. "But as they say, the real work's really just beginning now."

To reach reporter Bruce Spence, phone (209) 943-8581 or e-mail bspence@recordnet.com