The former Garlic Festival building got a new owner this week,
and the edifice has been re-christened with a garlic-themed
name.
Stromiga Real Estate Development, which has offices in Saratoga
and Canada, closed the sale of the
”
Allium
”
building for $4 million Wednesday after buying the three-story
structure at 7600 Monterey St. from Pacific Capital Bancorp, parent
company of locally based South Valley National Bank.
The former Garlic Festival building got a new owner this week, and the edifice has been re-christened with a garlic-themed name.
Stromiga Real Estate Development, which has offices in Saratoga and Canada, closed the sale of the “Allium” building for $4 million Wednesday after buying the three-story structure at 7600 Monterey St. from Pacific Capital Bancorp, parent company of locally based South Valley National Bank.
“I think the prospects are outstanding,” said Steve Benjamin, development manager for Stromiga. “The reason we’re excited about this deal is that we’re buying an extremely well-built building.”
Stromiga is naming the commercial and residential building after the flowering bulbous genus of plants to which garlic belongs. Along those lines, company officials think the project will blossom despite challenges that faced the project when it was owned by a partnership of the Gilroy Garlic Festival Association and a group of investors headed up by builder Randy Moen of Tanglewood Construction.
“It’s a beautiful building in a town that’s very hard hit,” Benjamin said.
Pacific National Bancorp acquired the building after the Gilroy Garlic Festival Association board voted in October 2008 to stop making payments on the $8.8 million loan it took out with its partner, Pleasant Valley Development Group, to construct the building. South Valley National Bank financed that loan. The Garlic Festival Association occupied a space on the ground floor of the building for about a year starting in May 2008, Garlic Festival Executive Director Brian Bowe said.
“I’m thrilled to see that it’s sold and that someone’s going to take the time to get some good tenants in there,” Bowe said. “It’s a quality building. I can attest to fact that whoever moves in there will be very happy.”
The Garlic Festival Association lost $1.3 million developing the residential-commercial project during the housing market meltdown, Bowe confirmed.
Kurt Michielssen, senior vice president of South Valley National Bank, said he was happy that the building sold, and he hoped that the edifice would prove to be an asset for downtown Gilroy.
Although there were no winners with the building’s transaction, it is always nice for a bank to be able to get a piece of foreclosed property off the books, he said.
“We don’t want to be in the development business,” Michielssen said.
The 42,000-square-foot modern looking stucco structure includes 24 condominiums on the top two floors, which Stromiga plans to convert into apartments, and retail and office space on the bottom floor. Those include apartments that range from 697 square feet to more than 2,000 square feet.
The apartments on the second floor are two stories and provide a good view of the city and some of the surrounding hillsides, Benjamin said.
“They’re condo-level apartments, and the views are spectacular,” he said.
Other amenities include private balconies, a courtyard that contains a barbecue pit and fountain, and wiring for Internet and satellite television service.
In addition, the building is the only structure in town with underground parking. The gated underground area contains 27 parking spots and individual storage lockers.
The market for apartments is far brighter than the market for condominiums these days, Benjamin said. He hoped that the apartments would be filled within six months.
Although Benjamin did not know what rents would be for the new apartments, the nearby La Aldea residential and office complex at Fourth and Eigleberry streets charges $1,150 per month for apartments that are nearly 700 square feet and $1,500 for 1,100-square foot “live-work” apartments that contain offices. In addition, the Monterey Street Condos project at 7680 Monterey St. is renting out its condominiums until they sell. One-bedroom condominiums rent for $1,250 to $1,280 per month and two-bedroom condominiums rent for $1,550 to $1,580 per month.
Stromiga may add some new apartments to Allium’s current 24 units on the ground floor area that faces the building’s rear courtyard, Benjamin said. However, the ground floor spaces that face the street will be reserved for office and retail uses.
Although the complex still requires some additional work, such as adding new flooring now that the condominiums are slated to become apartments, most construction is already done, Benjamin said. He hopes that leasing will begin as soon as Aug. 1.
The office and retail spaces may take a bit longer to fill, but Benjamin believes that will happen in time. The company was able to buy the building at a price that allows them to wait, he said.
Stromiga owns property in San Francisco, Campbell and western Canada, according to the company’s Web site. Benjamin said in April that the family-run company focuses on buildings with problems that his firm believes it can solve.
Benjamin said he sees strong potential for Gilroy because of its proximity to Silicon Valley.
“Our goal is to bring life to the building and ultimately to bring life to the core of the downtown of Gilroy,” he said.
Downtown developer Gary Walton, who owns the La Aldea commercial and housing project at Fourth and Eigleberry streets among other downtown buildings, said he was happy that the building sold. He said he hoped to see the dilapidated structure on the northwest corner of Monterey and Fourth streets torn down to further improve the intersection.
Garlic Festival officials initially envisioned that the building would tie the downtown area together, by serving as the gateway to one of the most anticipated projects in the city’s history – a 201-unit housing complex slated for the site of the old cannery just east of the condominiums. That project stalled, too, and is slowly beginning to recover.
