Local shoppers have been flocking to big-box stores in San Jose
and Gilroy for years, but now construction of a 650,000-square-foot
shopping center in Morgan Hill promises to divert some of those
trips by as early as next summer.
Morgan Hill – Local shoppers have been flocking to big-box stores in San Jose and Gilroy for years, but now construction of a 650,000-square-foot shopping center in Morgan Hill promises to divert some of those trips by as early as next summer.
According to city officials, the large outdoor mall that’s beginning to take shape on Cochrane Avenue east of Highway 101 will not only benefit local consumers, but city coffers as well.
Projections show the complex generating $2.3 million annually over its first 15 years.
“There’s always been a desire to increase the amount of retail in the city, said Jim Dumas, a project manager in the Morgan Hill Department of Business Assistance and Housing Services. Reports show Morgan Hill residents are spending up to $100 million annually outside the city’s limits.
“A lot of our dollars have been spent in South San Jose and Gilroy. We’re trying to capture some of that leaking spending that goes north and south of the city,” Dumas said.
Developers say a pedestrian-friendly outdoor mall with tree-lined walkways and attractively designed parking lots will do the trick. The shopping center, which hasn’t been named yet, will be anchored by the area’s largest Target store and a variety of other retailers and restaurants. Rumors that Petco, Staples and Cost Plus World Market would be among the stores could not be confirmed last week as developers said negotiations with several national chains are still ongoing. But key investors were happy to discuss the appearance of the shopping center, which they say will include colorful buildings washed in bright earth tones meant to blend well with the surrounding hills and the valley floor.
“We are planning a well thought-out shopping center that will be easy for the community to use,” said San Jose developer John DiNapoli. “We put a lot of time and effort in with the city and the Architectural Review Board.”
Time and effort are at the project’s foundation. Years of behind-the-scenes work were required to put three parcels together to create a large enough piece of land to develop. Ralph Borelli, CEO or Borelli Investment Company, said negotiating with multiple property owners posed a challenge from the start.
One of those property owners happens to be the Guglielmo family, who purchased the land in the 1940s to use as a vineyard and winery. It was the first acreage the family purchased in Morgan Hill.
“We are very excited as a family about this project,” said Gene Guglielmo, adding the family had been looking for 20 years to develop the land. “The city stepped up and has shown the same enthusiasm.”
As far as that goes, city officials agreed last year to waive or reimburse $11.5 million in impact fees over 15 years.
The fees normally are required to cover the costs of extending water, sewage and other parts of the city’s infrastructure to new building sites.
When developers indicated they would come up short financially, the city offered assistance to the project based on favorable sales tax projections, which will include $770,000 annually that officials say could be used for additional services related to the project such as hiring two more police officers.
The construction of the new shopping center comes as Morgan Hill wrestles with how to revitalize its downtown district.
A November ballot measure asks voters to allow more mixed-use buildings with retail stores at street level and apartments and condominiums overhead. Depot Street is currently being remodeled and the city has applied for a federal grant to turn Third Street into a pedestrian promenade.
While these projects and proposals are aimed at bringing more shoppers downtown, Dumas said the city’s support of a new outlying shopping center does not present a conflict of interest. He described trips to big-box stores as “power shopping” and trips downtown as “leisure shopping.”
“Downtowns always start out as the center of the city, then retail centers start happening that pull shoppers away,” he said, briefly recapping Morgan Hill’s history over the last three decades. “Then the city grows, and the downtown grows into an entertainment and nightlife district. That’s where we’re at right now.”
