The lease you can do

Given the relatively high rents being charged for most retail spaces in our area, it’s understandable that some aren’t reoccupied right away: a prospective tenant has to carefully calculate their chances of success before signing a long-term lease. But imagine my frustration when, after a tenant had decided that they could succeed in a particular retail space, the landlord opted to hold off and instead allow that space to remain empty. Such is the situation with the former Max’s Café space in the Sequoia Station shopping center, it seems. And it likely will be the case with the soon-to-be-vacant Pier 1 space as well.

I’ve been watching the Max’s Café space ever since the restaurant closed. That particular storefront is a large one that sits on El Camino Real, making it a highly visible part of Sequoia Station. Max’s closed in mid-December of 2018, and by June permits had been issued and work had commenced to convert the space into a Chase Bank branch. That work came to a halt by the end of October, however, and I’ve been wondering why. This week I finally learned what surely is the answer.

The Sequoia Station shopping center has been a popular topic of conversation lately: Lowe, a property development firm, has proposed replacing it with a high-rise development that would include a mix of retail, office space and housing all above a large underground parking garage. Today’s center devotes a full 6 acres to surface parking, which is incredibly wasteful in an area where developable land is scarce. The center’s single-story retail buildings occupy another 6 acres. A developer could do a great deal with this prime 12-acre parcel, especially given that it fronts onto El Camino Real and abuts on Redwood City’s Caltrain station. Lowe certainly sees the opportunity. If only it can come up with a mix that satisfies the City Council and a majority of Redwood City residents — most feel that Lowe’s current proposal contains too much office space and not nearly enough housing — its project should have little trouble gaining approval.

While Lowe works to craft a somewhat more palatable proposal, Regency Centers, who currently owns and manages the bulk of Sequoia Station, is not willing to tie its hands by signing any new long-term leases, at least until the center’s fate is clear. This, then, is most likely why the Chase Bank project was halted, and why, once Pier 1 sells off their remaining inventory, its space will surely sit empty.

Regency seems willing to hold off on leasing for a time, but not forever: those empty spaces translate to lost revenue. It appears that Regency will sit tight as long as it continues to see forward progress on Lowe’s project. But on Monday, the Redwood City Council clearly indicated that the community-based visioning process for the newly designated transit district (which includes the Sequoia Station property) should progress before the council will entertain concrete proposals such as Lowe’s, somewhat putting the brakes on things. Then again, recognizing the complications that might arise from allowing the visioning process to drag on for too long, the council also requested that city staff speed things up: staff hadn’t planned to begin the visioning process until next fall.

If for some reason Lowe’s proposal fails to gain traction, one might think that Regency would simply lease its empty spaces and allow Sequoia Station to live on pretty much as-is — and it may. But Sequoia Station faces a threat from another quarter: the California High-Speed Rail project wants to run four tracks through this part of Redwood City, doubling what is there today. These additional tracks would require more right-of-way, which would eat into the Sequoia Station property. Current estimates are that the Safeway and CVS stores (and Pier 1) would lose one-third of their buildings, making them no longer viable. This would of course require a major reworking of the center, adding impetus to a project such as Lowe’s.

Whatever the future has in store for the Sequoia Station shopping center, it almost certainly will undergo major changes in the next couple of years. In the meantime, don’t be surprised to see a few empty storefronts. But be assured that the fact that they aren’t being leased is not a reflection on Redwood City’s economic health.

Greg Wilson is the creator of Walking Redwood City, a blog inspired by his walks throughout Redwood City and adjacent communities. He can be reached at greg@walkingRedwoodCity.com. Follow Greg on Twitter @walkingRWC.