Following the closure of the Melting Pot restaurant at San Mateo’s downtown Caltrain station, city officials are set to consider whether a new restaurant, retail store or museum featuring digital games, among other establishments, will welcome San Mateo residents and commuters at the city gateway.
The two buildings included in the city’s downtown transit center have hosted a variety of tenants, from office space for the technology company Redkix in a 1,670-square-foot building on the southern end of the station to the Melting Pot, a fondue restaurant that opened its doors in 2008 at the 3,700-square-foot main retail site on the northern end of the site.
The effort to explore who might step forward as a tenant of the smaller building began when Redkix was acquired by Facebook earlier this year. Facebook will honor the lease, which was transferred to the Menlo Park tech giant in September and will terminate at the end of March. But the company has indicated it does not intend to continue occupying the space, and city officials have listed the space as available for retail and office in an effort to scope whether a stronger retail presence could be fostered there, according to a staff report.
Deputy City Manager Kathy Kleinbaum said the Melting Pot’s Monday announcement of its closure came as a surprise to city officials, who in June approved a new lease with the franchise after it failed to make rent payments in March and April, according to a June 18 staff report. The new agreement included financial concessions aimed at affording a new manager time to make tenant improvements this summer, according to the report.
Kleinbaum said city staff are just beginning to market the larger restaurant space, and some three months ago created a commercially listing for the office space, formerly home to the Downtown San Mateo Association and the San Mateo Area Chamber of Commerce. Though she acknowledged councilmembers have previously voiced support for a community-serving tenant over a private office, which is more closed off to the public, she noted many of the interested retailers chose not to pursue the space further after they visited it.
Because the space is somewhat removed from the downtown core, only gets a high volume of foot traffic during peak commute hours and wasn’t designed specifically for retail, Kleinbaum said it may be a challenging property for retailers, who may also be affected by the high volume of noise from Caltrain. To make the space ready for another use would likely require significant tenant improvements the city would be expected to share, said Kleinbaum, who said the space has a one-stall bathroom in the center and a kitchenette appropriate for office use.
She said technology companies and other office tenants may have been interested in the space given its location in the downtown, where demand for office space has been high, and noted it may also be suitable for a hair and nail salon, fitness studio or convenience store.
Though Kleinbaum felt the Melting Pot space may be more popular among restaurant businesses, she said it has been discussed as retail space and at one point was considered for a Kepler’s Books store. Though she said the city would be open to considering reduced rent to the right tenant, Kleinbaum acknowledged the startup costs for businesses can be quite large even with reduced rent given some of its challenges.
“At some point, it’s just not a red-hot property market,” she said. “These are challenging properties, and it might take some real time to find the right tenants.”
Currently, the office space is being offered for lease at $3.52 per square foot each month, which amounts to $70,540 annually and represents the rent under its current lease terms. When the lease ends, the city could raise the rent to market rate rent, which is currently $4 per square foot each month and $80,160 a year, according to a staff report.
Digital game museum?
After learning the Digital Game Museum, an educational institution focused on preserving the history of digital game development, was looking for a space, city officials reached out the museum’s management to gauge interest in the office space. Though an initial letter of interest has been submitted, Kleinbaum said the museum would operate with limited hours and would require reduced rent, the funding for which has yet to be assembled.
Though Mayor Rick Bonilla thought a museum could fit within the city’s downtown, he wondered if it may be better-suited for another location while another establishment that could better leverage the transit-oriented site is considered. He hoped officials could focus their energies on a long-term plan for the site, one that could include housing and ground-floor retail, and pegged the upcoming downtown plan update for that type of discussion.
“Being it’s a downtown and well-used Caltrain station, I see the possibility of having greater transit-oriented mixed-use development on that site,” he said.
Bonilla acknowledged the downtown is already served by Draeger’s Market at 222 E. Fourth Ave., but also wondered if another grocery store or another commuter-serving establishment could work well in the site as longer-term plans are shaped. The Trag’s Market site next to the train station is in the midst of a redevelopment plan for offices, retail and housing.
For Councilman Joe Goethals, how to generate more activity at the site was a priority heading into Monday’s discussion. He wondered whether another restaurant that is open during the day could be considered for the Melting Pot space, noting the fondue restaurant was only open in the evenings. Though he said he asked staff to reach out to restaurant owners who recently expressed interest in downtown space, Goethals said all options are on the table in future discussions of the station.
“I’m hoping for a use that will activate the space,” he said. “I recognize that the city’s interest is also to generate as much revenue as possible.”
With hopes new tenants could bring more activity to the train station, Deputy Mayor Diane Papan thought continued marketing of the properties could help inform the best uses for the station. Though she acknowledged the challenges of the site’s location on the periphery of downtown, Papan wondered whether a retailer such as a florist — which could benefit from foot traffic but also continue to do business for clients and events when traffic near the stations slows downs — could work there.
“I wouldn’t preclude anything at this point, I really wouldn’t,” she said.
The council meets 7 p.m. Oct. 15 at City Hall, 330 W. 20th Ave.
(650) 344-5200 ext. 106