The Future of Bishop Ranch

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Alexander Mehran Jr. never had much interest in real estate or business for that matter. He studied international relations at Brown University and cultivated a love of sailing — he made it to Hawaii on a solo voyage once.

But after several years of working for Goldman Sachs in New York, Mehran decided to come back home to join Sunset Development, the firm his grandfather, Masud R. Mehran, founded and his father, Alexander R. Mehran Sr., now runs.

Sunset operates Bishop Ranch, a 10 million-square-foot office park housing thousands of jobs that helped transform the Tri-Valley from bedroom communities to a major Bay Area job center.

Now the youngest of the Mehrans is looking at not just how to keep the business park full of tenants, but also how to adapt the park to changing needs of workers, tenants and the community — keeping the lights on and providing enough parking just doesn’t cut it anymore.

“We don’t just sit here and expect tenants will come our way if we do nothing,” Mehran said. “Now we’re trying to figure out how to make a highly amenitized workplace in the suburbs.”

In the future, Bishop Ranch expects to usher in a new town center for San Ramon as well as incorporating housing in the business park.

Mehran joined Sunset two years ago and served as general manager overseeing the business park’s maintenance and construction on spaces for new tenants. He now plans to move into the development side of the business.

The 32-year-old takes after his dad: tall, dark hair, looks right at home in a suit. But Mehran said he prefers a more collaborative approach to management, while his father tends to juggle details and decision-making in his own head.

The younger Mehran called his father obsessively detail oriented — perhaps another trait he inherited or has picked up in the last few years. He can’t take a tour of Bishop Ranch without making sure everything from landscaping rocks to fountains in front of buildings look their best.

Attending to details matters in a competitive business such as Bay Area real estate.

“Around the country, suburban business parks are struggling,” said Ed Del Becarro, managing director of Transwestern’s Walnut Creek office and a longtime East Bay broker. “A lot of the sprawling business parks have dinosaur buildings. Bishop Ranch experienced that in the mid-2000s to late 2000s. Bishop Ranch had to reinvent itself.”

Indeed, the development has managed to shore up occupancy close to 95 percent by landing some of the East Bay’s largest office deals in the past five years, including Pacific Gas & Electric taking a total of 411,060 square feet last year. Bank of the West grabbed 240,000 square feet in 2009; Robert Half leased 233,674 square feet in 2008; and General Electric leased 125,000 square feet in 2011.

“It’s a real destination for tenants moving out of San Francisco, the north Interstate 680 corridor, Oakland or north Silicon Valley,” Del Becarro said. “It has a corporate directory of major names, national names and headquarters.”

Many of the park’s tenants are attracted to the Tri-Valley’s suburban quality of life of single-family homes, good schools and shopping nearby. General Electric, for example, selected Bishop Ranch for a Bay Area innovation center in an area where its employee pool of engineers would want to live.

“It’s a premier business address that is centrally located that provides an opportunity for companies to work and hire here locally closer to where people live,” said Tom Terrill, CEO of the East Bay Leadership Council. “Their success is evident in their buildings and the quality of people who do business there. It reflects the types of jobs the East Bay attracts and grows.”

For all of Bishop Ranch’s success in the past three decades, the future brings challenges, such as how to adapt to changing workplace trends.

Sunset is an “old school” real estate company, Mehran said, but the approach of just holding assets and waiting for them to appreciate no longer works.

Mehran said he wants to steer Bishop Ranch toward the Google model where employees can access all the services they need, including food, retail, dry cleaning or exercise and make it easy for them to get there.

“The package we’re delivering for the rental rates we charge is the best,” Mehran said. “Value doesn’t just mean the rental rate, it means the amenities, the quality, when your light bulb goes out, we change it right away.”

At Bishop Ranch, about 30 percent of the people who work in the park use transportation other than driving themselves. That includes carpooling, public transportation, biking, shuttles from BART or the park’s new bus to San Francisco.

Mehran has overseen efforts to bring amenities such as bike sharing, electric car sharing, food trucks twice a week, and movie nights for employees and families.

Bishop Ranch plans to add more housing into the park. Sunset has already entitled a 2.1-million-square-foot, mixed-use development known as City Center that Mehran says will serve as a downtown for San Ramon with a new city hall, public library, retail, restaurants and apartments to break ground next year. That project has been in the works for several years and was originally conceived as a luxury shopping center like Santana Row.

“We’re re-imaging it to be sort of a very authentic downtown node, which isn’t a manufactured thing to create shopping dollars,” Mehran said. “It’s not focused on the $1,000 handbag. It’s more focused on the $30 polo with a trip to the movie theater and dinner.”

Beyond City Center, Sunset has 700,000 square feet of office entitled and ready to build when demand comes along.

But Mehran is more interested in tearing down older, two-story office buildings to make room for apartments.

The Tri-Valley has plenty of options for family housing from townhomes to seven-figure estates, but there’s nowhere for the unmarried, childless, mid-20s to mid-30s set to live.

“For that age group, it’s not very attractive to look at San Ramon right now, because that’s where their parents live,” Mehran said. “But, I know that there’s a huge interest and demand from companies with temporary workers who would want to live in apartments.”

Bishop Ranch will most likely never look like downtown San Francisco — nor does Mehran want it to — but reshaping and becoming more dense is in the works.

Throughout the country, suburbia is waking up to the reality that more dense development is a better direction, said Gabe Metcalf, executive director of SPUR, a regional planning advocacy group.

“The convenience of more compact development where you can get to things more easily is something people want these days,” he said. “Big office park developments like Bishop Ranch have the opportunity to be at the forefront of this, partly because it’s so much land under so much ownership and they have the opportunity to think big.”

Mehran echoed the idea that people in the suburbs now demand more city-like amenities such as restaurants, entertainment near home and the ability to walk where they need to go.

What is still lacking, he said, are meeting points or nodes to bring people out of their homes to interact in public areas.

“Luckily we have a little domain here. It’s pretty hard for people to say, ‘I don’t want Bishop Ranch to change!’ It’s not going to face some huge opposition,” Mehran said. “When I’m 50, we’ll have thousands of housing units here and we’ll have people living, working, eating and socializing here, making friends.”

 

Bishop Ranch at a GlanceTotal land area: 585 acres.  Founded: 1978. 

Developer: Sunset Development, founded by Masud R. Mehran, whose son, Alexander R. Mehran Sr. is now CEO. Alex Mehran Jr. is currently general manager.

Size: 10 million square feet office, retail, and hotel space. Tenants: More than 600. Workers: More than 35,000. 

Major tenants: Chevron, IBM, General Electric, PG&E, Bank of the West, Toyota, AT&T, Del Monte Foods, Hill Physicians, Robert Half, Ford, and JPMorgan Chase.

Tenant size: 150 square feet to more than 500,000 square feet. 25 percent of tenants lease less than 5,000 square feet.


Blanca Torres covers East Bay real estate for the San Francisco Business Times.

 

Posted by Lara Mijatovich. Article by Blanca Torres of the San Francisco Business Times. Photos: Spencer Brown on 21 June 2013