News
Ikea Anchors Dublin's Growing Retail Clout
By David Goll
East Bay Business Times
March 26, 2004

Just as Los Angeles was once described as "19 suburbs in search of a city", so has Dublin been similarly slammed - with 57 fast-food restaurants as its identity.

Both have exacted revenge on their detractors, though. While Dublin has not joined L.A. as one of the world's leading cities, it is gaining new respect from its neighbors, as an emerging retail powerhouse in the East Bay.

In the latest coup for Dublin, its City Council last week approved the construction of a 317,000-square-foot Ikea furniture store, which will bring one of the world's most recognizable retailers to town by the first half of 2006. The store will be the largest in the Bay Area - the third and probably final store built in the region by Ikea International A/S of Helsingborg, Sweden.

To be located just east of the Interstate 580 interchange with Hacienda Drive, the trophy Ikea store will sit across the street from the hugely popular Hacienda Crossings big-box retail center, which boasts Best Buy, Pier 1 Imports, Barnes & Noble Booksellers and its own IMAX theater.

A few months later, a 137,000-square-foot, multilevel "lifestyle" center, being developed by Danville's Blake Hunt Ventures Inc., is slated to open just north of Ikea, bringing a new infusion of upscale boutiques, tony home merchandise stores and trendy eateries to the Tri-Valley.

"Dublin has been a center of commerce for a long time," said Janet Lockhart, mayor of the fast-growing city of 33,000 residents. "Even going back to when there wasn't much here, people came to Dublin to make purchases and get things repaired. These latest developments are taking us, however, to another level."

A higher level dictated by, as the old real estate maxim says - location, location, location. As the Bay Area's center of population and business activity has migrated south and east, Dublin has an ideal setting at the confluence of interstates 580 and 680. Commuters traveling between housing and jobs in the East Bay, South Bay and Central Valley must pass through the area and the frequent traffic jams expose drivers for even longer periods of time to Dublin's businesses.

Doug Greenholz, Bay Area real estate manager for Ikea, said the busy freeways and Hacienda Crossings give the location a "critical mass" to support such a huge store. The new Dublin store and the one opened last year in East Palo Alto will bring a "welcome cannibalization" of sales from the region's original store in Emeryville that caused notorious traffic tie-ups when it opened in 2000.

The new Tri-Valley development, which will feature an Ikea store elevated on stilts above a 1,126-space parking lot, will be able to take advantage of the commute crawl because the city authorized construction of a 99-foot-high sign to advertise its stores.

And there's still plenty of room for even more retail.

"The main reason Dublin is so hot is the 580-680 interchange, which has become the most important in the Bay Area," said Jim McMasters, commercial broker for Colliers International. "And it still has the land for large developments. Thousands of new homes are being built in Dublin, San Ramon, Livermore and Tracy and when the residential market is hot, so is the retail market."

McMasters describes the area as "underretailed" because of the rapid residential growth.

"Retailers don't feel the area is saturated yet," he said. "There's still a lot of interest in this area. Hacienda Crossings is doing very good numbers and the restaurants are packed. The demand is almost insatiable at this point.

"We had tenants move into Hacienda Crossings at $18 per square foot," McMasters said. "New leases there are going for $30 per square foot."

Still, even with rising rents - or perhaps because of them - it's fun these days to be Chris Foss, economic development director for a city that's in demand.

"Dublin has caught fire because we have large, developable parcels of land sitting right along a busy freeway with great infrastructure and access already in place," Foss said. "We have a well-educated population with high amounts of disposable income, too.

"And the great location is an easy trip for people from throughout the Tri-Valley, Castro Valley, the Central Valley, even people in Fremont and the east side of San Jose."

In 2004 dollars, Ikea and the lifestyle center should generate $7.5 million in sales tax revenue for the city during its first decade of operation, Foss said. That's a major consideration for city officials.

"Sales tax is even more important today than it was in the past," Mayor Lockhart said, noting its comparative reliability as a revenue source to fund city services compared with depending on the financially strapped state. "We hope the state fiscal crisis will end soon, but you can always count on people shopping. With a city growing as fast as ours, (the sales tax) becomes extremely important."

Over the past decade, the city's sales tax revenue has more than doubled to more than $13 million from less than $6 million in 1994. Hacienda Crossings alone generates $1.5 million annually, Foss said.

Although its construction depends on plans for a new West Dublin BART station, a mixed-use development with more than 300 apartments, 150,000 square feet of office space, 7,500 square feet of retail and a 150-room hotel could spark even more development interest in the city's "downtown" area that consists today of elaborate strip malls with such tenants as Target, EXPO Design Center, Burlington Coat Factory, Mervyn's and Ross Dress for Less.

Lockhart said city officials plan to widen sidewalks, install new lighting fixtures and plant more landscaping to give the downtown area more of a unified look, but they have no illusion it will become the focal point of their sprawling suburban community.

"We want a greater amount of residential development in the downtown area to support greater commercial development," she said. "But we envision Dublin as a city of villages, with each commercial and residential area having its own distinct look and flavor."

 
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