January 02, 2014

State Farm campus buyer plans transit-based community

By Jeff Quackenbush, Staff Reporter
Business Journal

An aerial view of the former State Farm campus. (image credit: Cushman & Wakefield)

ROHNERT PARK – A Southern California-based housing developer purchased the nearly 30-acre former State Farm Mutual Automobile Insurance campus, a move toward realizing a long-held community goal to create a new “heart” for Sonoma County’s third-largest city.

Several buyers considered acquiring the property in the three and a half years since the insurer pulled up stakes from the 320,000-square-foot insurance claims center complex at 6400 State Farm Dr., but Irvine-based SunCal Cos. opted to pursue acquisition, closing the deal Dec. 24.

The sale price wasn’t disclosed. Purchasing entity North Bay Community, LLC, financed $30 million of the acquisition through New York-based Catlin U.S. Investment Holdings, according to public documents.

“We are very, very bullish on the Bay Area in general, and the North Bay has tremendous potential,” said Joe Guerra, who oversees SunCal’s Northern California acquisitions and entitlements. “The site has great infill potential.”

Entrance to former State Farm campus in Rohnert Park.

As one of the nation’s largest privately held developers of master-planned communities, SunCal has been known for working with huge projects throughout the U.S. with hundreds of acres and homes. The developer also has undertaken several projects of the size of the one in Rohnert Park, including a small project near San Rafael a number of years ago, according to Mr. Guerra. One such project is a 50-acre undeveloped property near Vallejo and Benicia that SunCal is in contract to buy.

SunCal has offices in New York, Washington, D.C., Las Vegas, Denver, Austin, Savannah, Ga., and Melbourne, Fl. In Northern California, the developer in November received approval for nearly 2,000 homes, school, parks and shops in the 189-acre Dublin Crossings partial redevelopment of the Camp Parks Army base in Dublin. SunCal also is securing entitlements for the Delta Coves project in eastern Contra Costa County as well as several projects around Stockton. Large projects are under way in Savannah, Washington, Austin and Las Vegas.

Two major things that made SunCal pursue the Rohnert Park opportunity over the past year was a major redevelopment planning effort city government has under way and a Sonoma Marin Area Rail Transit station planned to be built next to the property, according to Mr. Guerra.

“A clear trend in development is pedestrian access, and that is easier to do when you have a library and shopping center across the street and transit coming in the next couple of years,” he said.

The first aspect is an anticipated three-year planning effort for the 282-acre Central Rohnert Park Priority Development Area. The City Council launched the land-use planning initiative early last year after receiving a grant from the Metropolitan Transportation Commission to promote transit ridership.

‘At the heart of our city’

The city has been trying to create a downtown area for years, and departure of State Farm in July 2011 opened up a field of opportunities. New civic buildings and mixed-use developments were added to the City Center district across Rohnert Park Expressway to the north from the State Farm site in recent years. But the State Farm property is seen as a key piece of the planning area, which covers between Highway 101, the railroad tracks and Santa Alicia Avenue.

“That property is a very key component not only in that plan but also it’s at the heart of our city,” said Marilyn Ponton, manager of the city Development Services Department. Committee meetings are set for Feb. 4 and another workshop is planned for March, moving toward draft planning documents later this year.

SunCal often undertakes extensive public visioning meetings on its projects, a process that with environmental-impact document preparation and review can take at least 15 to 18 months, so to have Rohnert Park already undertaking a land-use study that includes the property is fortuitous, according to Mr. Guirra.

The redevelopment plan will run parallel to the priority development area process but not wait for it, he said. Based on the initial meetings of the citizens committee late last year, SunCal is creating a development proposal for submission this month that will incorporate requests for transit-oriented development and a mixture of uses, including residential to help boost train ridership as well as retail dispersed across the project. Whether there would be vertical integration of these uses remains to be determined, he said.

Mayor Joe Callinan said he’ll be pushing to retain the expansive lawn that can be seen from Rohnert Park Expressway and State Farm Drive.

“We want to keep the big open space out there, because its a signature for the entrance Rohnert Park,” he said. Perhaps, it can be integrated into the civic center across the street, such as with a farmers market or something similar. An idea floated from councilmembers to SunCal in the months leading up to the sale – turning the property into a downtown plaza – might not be economic feasible, he said.

On the rail station effort, the SMART board in February 2012 approved the relocation of a planned station from the north end of the city to the site of municipal corporation yard at the southern end of the State Farm property. The initial operating segment of SMART is scheduled to open by early 2015 between San Rafael and Charles M. Schulz-Sonoma County Airport.

Sale reduces RP office vacancy

The sale of the State Farm complex for redevelopment improves the city’s large office vacancy rate. State Farm had 1,100 employees working there at the peak, but a shift of employees to other offices started 10 years ago. The Rohnert Park workforce dwindled to 350 workers occupying only 35 percent of the building at the end.

Depending on how available office space in Rohnert Park is figured, the vacant State Farm space could have accounted for a large portion of it. For example, commercial real estate brokerage Keegan & Coppin Co. Inc./ONCOR International estimates Rohnert Park vacancy in the third quarter to have been 43.7 percent, or nearly 800,000 square feet.

City consultants estimated that office vacancy would be nearly 38 percent with State Farm and 14 percent without it, according to a priority development area document. The consultants estimate that redevelopment in the area would add 1,800 jobs through 2040, partly offsetting about 2,000 jobs lost in the planning area since 2002.

There remains significant potential office space in the former Agilent Technologies buildings at Sonoma Mountain Village at the southeast edge of the city as well as the former homes of Next Level Communications, AT&T and Comcast to the north on State Farm Drive, according to local real estate experts. A major portion of the State Farm Drive space is under consideration for medical offices.

Representing State Farm in the transaction were Sean Heaton, Glen Dowling, Tony Sarno and Dennis Richardson of Cushman & Wakefield.