Shoe Palace will not expand into a warehouse it is currently constructing next to its headquarters on Jarvis Drive, and will instead lease it to other tenants.
Morgan Hill city officials released information Jan. 7 about the project in response to residents’ concerns about the scope of the building.
Located at 745 Jarvis Drive adjacent to Highway 101, the project consists of a 503,400-square-foot warehouse, office and distribution facility. In recent weeks, crews have raised some of the structure’s massive concrete walls at the Shoe Palace construction site, casting a high-profile view for motorists passing by on the freeway just south of the Cochrane Road exit.
The facility was originally intended as an expansion of Shoe Palace’s headquarters and distribution capabilities to support its nearly 100 shoe and apparel stores across the western US.
The new facility was expected to hire 100 additional people, for a total of 300 employees, while also increasing truck deliveries from five to eight per day. A total of 56 truck docks are proposed in the plans.
A shift in Shoe Palace’s business operations has changed its plan for the facility, according to city officials. Calls to Shoe Palace were not returned as of press time.
Shoe Palace is now selling its current 258,122-square-foot building at 755 Jarvis Drive for $53 million, with the intent of leasing it back as a tenant. Shoe Palace purchased the building in 2013 for $12 million, according to an article in the Silicon Valley Business Journal.
The building’s sale will help fund the construction of the new warehouse, which is estimated to be finished sometime in 2021. Once complete, Shoe Palace will lease the new facility to other tenants.
According to a listing by Colliers International, the building could be divided into two separate spaces. Lease rates are estimated at $10.80 per square foot per year.
“As the Shoe Palace property for the expansion project is currently for sale, it should be clarified that the leasing or selling of a property does not entitle anyone to use it for a specific business or purpose,” Morgan Hill spokesperson Maureen Tobin wrote in the informational announcement. “If a future use exceeds the number of trips studied under the environmental review for Shoe Palace or creates another impact outside of what was studied and approved, it would represent a change which would likely trigger the need for a use permit and/or a change to the site review.”
The expansion project dates back to May 2018, when Shoe Palace submitted a permit application. A public review period ran from October to November 2018, after which it was approved administratively. According to Tobin, the project, per zoning, did not require planning commission review.
The project has drawn opposition from a citizens group known as Morgan Hill Responsible Growth Coalition, which claims that residents weren’t adequately notified of the proposal.
“Without any engagement with Morgan Hill residents, without any review by the planning commission, without any economic impact analysis, with the city council never putting this project on any legislative agenda and never discussing it in a public meeting, and not taking a single vote or other recorded decision, a half-million square foot distribution center with 56 truck loading docks was approved in 2018 by one person, and Morgan Hill citizens only found out about it once they saw dirt being moved and dust flying on the construction site,” the group wrote on its website.
The project’s plans can be viewed at www.morgan-hill.ca.gov/1739/Shoe-Palace-Expansion.