Even More Retail Coming to Gilroy

An artist’s rendering of the 101,000-square-foot retail center

Developer to break ground in December on new 117,000-square-foot
shopping center; Another expected to begin construction in the
Gilroy – If you thought Gilroy simply had no more room for retail – think again.

In the next two years, residents will see two new shopping centers on the scale of the former Wal-Mart site – a 125,000-square-foot building that now sits vacant – crop up in the city’s northern and southern shopping hubs.

National developer Land Capital Group plans to break ground in December on Gilroy Commons, a 117,000-square-foot shopping center that will lie south of Highway 152, immediately east of Gilroy Crossing. In the spring, another developer is expected to start construction on a 101,000-square-foot shopping center just north of the Gilroy Premium Outlets.

Land Capital’s marketing representative Lynn Gibson-Deveau said tenant agreements are pending with a “national retail store,” a family fitness center, as well as a “national wireless company” and several smaller businesses. Pot Belly Deli and Pot Belly Burger, a nail salon, and Check ‘n Go (a check cashing and small-loan business), have already signed agreements.

The Land Capital project represents the next major phase of commercial development on the city’s east side. Last month’s opening of the Wal-Mart Supercenter across Highway 152 represented the last major addition to Pacheco Pass Shopping Center, while Famous Dave’s barbecue restaurant, now under construction, will eat up some of the last remaining square footage in Gilroy Crossing.

Despite the struggle to find new tenants for the old Wal-Mart site off Arroyo Circle, Gibson-Deveau was confident Land Capital would lease most or all of the space in Gilroy Commons before the first stores open in fall 2006.

“We expect to be 90 percent leased by the time we complete construction,” she said.

She brushed aside the notion that Gilroy has a glut of retail stores.

“It’s right on that edge where there isn’t really a shortage,” she said, “but there really isn’t an oversupply either.”

Gilroy Commons, which would take a year to build, would attract different types of businesses than a similarly sized shopping center slated for construction just north of the outlets, Gibson-Deveau added.

Last week, Gilroy City Council approved the latest addition to the city’s northern shopping district – a 101,000-square-foot retail center on 10 acres off San Ysidro Avenue.

Representatives of the project, located on the east side of the road between Home Depot and the outlets, could not be reached for comment. City Planner Cydney Casper said the developers hope the first stores will open by 2007. The new shopping center will have a large “anchor” retail store facing the roadway and two lines of stores stretching toward the street like arms of a “U.”

Casper could not say if any stores have signed leases.

Chris Vanni, a local commercial real estate broker, predicted that the economy could influence the city’s ability to keep filling its ever-expanding retail centers.

“At some point in time, rising gas prices and material costs will be passed on to the customer,” he said. “At that point, will the consumer continue to purchase at the rate that they’re purchasing? At the same time, interest rates are going up. It will be interesting to see what happens.”

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