No one is saying that Walnut Creek's economy is likely to return to the boom times of pre-bust 2008. But two major ventures give city officials hope that the city's business climate is regaining some of its former vitality.
A proposed new Volkswagen dealership will triple the size of the existing Dirito Brothers. Volkswagen will open its dealership near the northeast corner of North Main Street and Central Road. The Contra Costa Times reports that Volkswagen paid $10.5 million for the four properties that make up the new 2.3-acre site.
"We're very glad to see this reinvestment in the city," said City Manager Gary Pokorny. "A dealer makes a decision like that every 40 to 50 years. What we're hearing from auto dealers throughout the city is that business is slowly beginning to tick back up."
Dirito Brothers currently crowds about 100 cars onto a one-acre lot across from Target. "We've been looking for more than 10 years for suitable property in WC to expand," said Rick Weible, manager.
VW has begun the process to gain city approval to build a new 35,000-square-foot state of the art facility. "We expect things to move forward and open sometime in the summer or fall of 2011," Weible said.
Dirito Brothers relocting a few blocks north would allow Nissan to expand its lot. This major investment in Walnut Creek shows that the reeling auto industry may be looking for better times.
"VW is doing well," Weible said, adding that the company will soon roll out its Jetta TDI, a fuel-efficient diesel-powered car.
As new car sales sagged in 2008-2009, dealerships in Walnut Creek stayed afloat by selling used cars or by focusing on their service departments.
Total sales tax revenue in the city plummeted from $21 million in 2006 to $15.5 million in 2009. Likewise, sales tax revenue from auto-related activities--including new car sales and service--dropped from $6.1 million to $4.3 million. Through those years, auto sales tax revenues consistently remained a large part--nearly 30 percent--of the city's total sales tax revenue.
Weible's observation that cars sales are starting to pick up is shared by dealers throughout the city. While land for a dealership is as expensive in Walnut Creek as it is in San Francisco, "it is worth it," Weible said. "Walnut Creek is the East Bay shopping hub, the convergence of the two highways leads to Walnut Creek. People will come here to shop and they'll stop to look at cars."
Another feather in Walnut Creek's cap comes from the Hall Equities Group's recent sale of a 75,000-square-foot building on Civic Drive to Mechanics Bank. The bank, with a long history in the East Bay, wants to relocate about 150 employees from the bank's Richmond headquarters.
While the headquarters will remain in Richmond, the new Walnut Creek space allows the bank to expand its operations.
"We have been looking for at least two years for a new location for our administrative operations," Steve Buster, chief executive officer, told the Contra Costa Times. "We considered San Francisco, Oakland and Walnut Creek, among others."
Walnut Creek won out because it is "the economic epicenter for our deposit base and our loan activity," Buster said. The first group of employees, about 60 workers, will move to the building on Civic Drive in the spring of 2011.
"It's great for Walnut Creek," said Mark Hall, president and CEO of Hall Equities Group. This purchase was possible because commercial real estate prices have come down to realistic levels, he said. For the past few years, Hall's development company has invested in projects outside California because the cost of doing business in here had become unsustainable.
"We are back in our back yard," he said, referring to three major Walnut Creek projects Hall Equities has invested in: a new development on North Main that will house a fitness center and fast food restaurant, the redevelopment of the old co-op on Geary Road, and the Centre Place office, retail, and restaurant complex that is under construction along South California Boulevard.
Relocating some of Mechanics employees to Walnut Creek "is great news, " Pokorney said. "It's always good to have such a major corporate presence in Walnut Creek. It is an affirmation that downtown Walnut Creek is a great place to do business."
The fact that Mechanics, "a very strong, locally-focused business," is creating a major administrative center in Walnut Creek is another sign that that the economy is picking up, Pokorny added. "We have been hearing that many businesses are feeling that now is a good and strategic time to be reinvesting for the next 20 years."