YIMBY Interview with Alex Mehran Jr. of Sunset Development

A few weeks ago, YIMBY visited Bishop Ranch in San Ramon to learn more about plans to build thousands of new homes in the business park. The 2020-approved project has been revised to include an additional 2,6000 units on top of the former Chevron headquarters, with plans to modernize their remaining office space with added flexibility to attract and retain tenants. During our visit, YIMBY got to talk with Alex Mehran Jr, president and chief executive officer of Sunset Development Company.

The Mehran Family has owned Bishop Ranch since 1978, with Alex Mehran Jr. being the third generation to oversee the community. The 585-acre business community has millions of square feet of office space across dozens of buildings. At the heart of Bishop Ranch’s office campus is 2600 Camino Ramon, known as Lakeside BR 2600, built in the 1980s by Pacific Bell. The SOM-designed office complex yields 1.8 million square feet of office space. It was the largest office building in the Bay Area until the construction of the 2.8 million-square-foot Apple Park in Cupertino. Sunset partnered with MetLife to reacquire the property in 2014.

City Center Bishop Ranch aerial image, image by author

In 2019, Sunset opened City Center Bishop Ranch, a $300 million open-air shopping mall with 300,000 square feet of retail space. The complex is 92% occupied, with nearly 60 tenants offering a wide range of products and services. The busy shopping center is expected to be the gravitational heart of CityWalk and could entice future residents and other retailers.

In 2022, Chevron sold its former global headquarters, a 92-acre campus at 6001 Bollinger Canyon Road, back to Sunset Development. However, the company will reestablish its global HQ inside Bishop Ranch with a 400,000-square-foot lease at 2600 Camino Ramon. Last month, the City of San Ramon approved a new general plan that includes rezoning several sites within the former Chevron Campus. Sunset has initiated the planning process to transform the property into a 2,600-unit mixed-use neighborhood called Orchards. The Orchards will include retail and recreational facilities and publicly accessible park space.

The Orchards high-density variant, image courtesy San Ramon Planning Department

Across Bishop Ranch, homes are already listed for sale in Summerhill’s City Village, and the Belmont Senior Living complex is expected to open next year. Bishop Ranch Parcel 1A has been cleared and is construction-ready for a seven-story apartment infill by Related Companies. As the nearly six-hundred-acre community is buzzing with activity, YIMBY’s Andrew Nelson and Rick Totten sat down with Alexander Mehran Jr. Question will be italicized.

YIMBY: Bishop Ranch has been in your family for about 45 years. It’s been mostly office-focused and very successful. How do you feel about transitioning into this new world of mixed-use development?

Mehran: We try to get better every day. That’s my family’s culture, and I’m proud to continue that.

It will be different. We have maybe 8 or 10 owners right now. As soon as SummerHill is done, there will be 404 additional owners. So, what changes? I don’t know. I have ideas about what it might bring, and I think that it’s really powerful to have people who are engaged with the site in that way as owners. There will also be renters, seniors, and more new office customers. It’s exciting, and it’s a logical path for the project.

There are great schools across all our sister cities in Alamo, Danville, Blackhawk, Diablo, Dublin, and Pleasanton. These are amazing places, and then there’s a spot in the middle [of San Ramon] that only had this business park where a downtown should be. It’s totally logical.

I’m not scared of the direction, I just want to make sure that it happens in a planned way. You see places where major land planning mistakes were made, and we’re trying our best to be super thoughtful about it. I want it to be the best place it can be. I’m excited about the future.

Mayor’s Park overlooked by housing, image courtesy Sunset Development

YIMBY: On the subject of ownership, you have sold the SummerHill site. Is the longer-term model going forward for you to act as master developer and dispose of the plots so that, eventually, you just manage the common parts of the estate?

Mehran: Yes, exactly. We’ll bring in partner developers that share our interests. Related is an amazing developer, Belmont is an amazing developer, and SummerHill is an amazing developer. To the extent that we want to build an apartment building at some point, I’m sure we will, but we own a lot of stuff here, and we want to accelerate it.

Of course, we have design control over everything, we have some operational controls and there’s a contribution they make to us for maintenance. There’s still an ongoing partnership to make sure that it’s the way we want it to be in the long term.

YIMBY: It’s an interesting phasing challenge you’ve got.

Mehran: Yeah! One of the biggest things is pulling the infrastructure in for everything. You’ve got PG&E, East Bay MUD, all these agencies that are overtaxed… Figuring out how you get the piping in such that it works for phase one but also works for phase five is a pretty big challenge to sort through.

YIMBY: Will construction start at the edge and move towards the 2600 Camino Ramon building?

Mehran: Yes, I think that we’ll start all the for-sale housing towards the southern end first, and then there will be investment builders, and it will probably be us that builds the retail. I’m not sure what the timing will be for those sites, it’s just as quickly as things are leased up, we’ll be building more of it.

YIMBY: It’s an interesting question about the different products you can bring to market to try and get some pace into the absorption. Do you have any ideas about how you will differentiate between products?

Mehran: The home builders talk a lot about this. Even in a five-pack of townhomes, they have many different floor plans that appeal to different people. One thing we’re working on is a place that appeals to somebody who wants two bedrooms to be able to rent one with a roommate. There’s not going to be a lot of that, but that’s a different product: two-story, three-story, roof deck, no roof deck, tandem parking, side-by-side parking.

So you try creating these different things, and home builders could talk about the different layouts forever. And on some level, I’m interested in that, but on some level… a 2,000 square foot house, you can slice and dice it a bunch of different ways, but somebody either wants the detached one or they want the attached one.

Then you have seniors, and senior housing comes in different flavors. Belmont is five stories, elevator-served in a dense format. You can also do seniors in an age-restricted 55 and over lower-density product.

You can do condos, you can do affordable housing, apartment buildings, the hotel, all these different ways to build up the place and we just have to keep them all on a low boil all the time just to keep the place growing. We obviously have a huge regional housing problem, so it’s cool to be able to help solve that.

Bishop Ranch outdoor amphitheater between 2600BR and City Center Bishop Ranch, image courtesy Sunset Development

YIMBY: One thing that has been quite common is temporary uses to try and enliven these large developments. Saying: we’re not using this piece of land for another 10 years, so what can we put on here to draw people in and make the place exciting? Have you got any ideas?

Mehran: I struggle with that. The best example is Topgolf. People would love a Topgolf around here, but there’s just a bunch of things to think about with that. You can say let’s just put it there on a 20-year deal, and we won’t be doing anything on that site for 20 years. But then what if it’s successful? I don’t want to do something that gets taken away from people. So we want to do permanent things. In a way, you’d like to test certain things, and 20 years is probably long enough to build something and make enough money that it makes sense to do it, but overall, I struggle with that.

YIMBY: City Center Bishop Ranch has, of course, been quite a success. You said 92% occupied right now. How important was that in terms of thinking forward toward the CityWalk master plan?

Mehran: City Center is the heart of everything in Bishop Ranch. We did 4 million people last year. You think about an office building, you’ve got the same 1,000 people coming in and out of the building. The impact you can make with a place with 4 million people come through…

Everybody who comes to town, they’re going to take them to dinner there, right? So it’s everybody’s impression of the city. That’s why we hired Renzo Piano Building Workshop. That’s why we worked and waited for all these tenants. There were tough days in there where the thing wasn’t leasing, and Jeff (Dodd, Senior Vice President, Retail – Bishop Ranch) said, “Well, I can do the generic retail tenants that are in every mall…” and I was like, “Let’s wait, let’s keep trying on Slanted Door or keep trying on Equinox,” and we got it over the line.

It was hard for people to understand, too, because people in the community would say, “I love this restaurant on San Ramon Valley Boulevard.” And it might be a great restaurant run by a wonderful guy who programs it, and people love the place. But he’s one guy in a restaurant, and to take the restaurateur and make a second location is a different kind of company. That’s a company that has to have a construction person and a line of credit and knows how to build a restaurant from scratch.

Then the other place to go is to the big chains, and we didn’t want that. We had to find these sort of middle-ground people who could finance and build a restaurant but were local, cool and had the energy. So that was tough, but it was successful.

YIMBY: Renzo Piano is, of course, a big name in architecture. Should we be expecting other big names from the architecture world?

Mehran: I think we’ll do that again. It seems like when you get into that with housing, though, it’s tougher. It’s a less custom thing, and there’s a production element to housing. Certain things work, and around here, people kind of want the normal things. Maybe there would be something with a public space or a new office building or something like that.

With residential, you want to go to high-end and great designers, but you don’t want to go fully custom. City Center is fully custom. There’s nothing in there that we bought off the rack, every single part, and piece, the parking, everything was designed. With housing, that doesn’t really work.

YIMBY: What’s keeping you awake at night?

Mehran: Well, there’s a lot written about offices, and it is just really hard. We put a lot of money into the offices, but for a customer to pick up their office and move it somewhere, rethink it, or redesign it is a big cost and a hard decision. It’s made even harder when you don’t know how big it should be. Say, on Wednesday, I have everybody come in. Well, then, what do you do on the other days?

So, that’s why we’re building turnkey offices, building the studios, and doing all these different things to create spaces that are already done so that people can come and just try it because it’s just hard to unstick people right now. Then, when you couple that with California, where people are more resistant to coming into the office, and it’s super expensive: it’s expensive to build the office, it’s expensive to have the employee.

Everybody agrees we need to get back to the office. Let’s do it! I know I’m self-interested in saying that but I know that being in the office is good for me, and you see the happiness of the people that are here. It’s just resolving this issue of capacity, utilization, and cost.

I think we have some cool ideas, so this is a big year for us to continue leasing, and we’ve had good leasing success. The thing you lack is that we used to do a lot of the 200,000 square foot deal, and now it’s a lot of 10,000, 15,000, 5,000 square feet – you’ve got to do a lot of those to catch up on where you were.

City Village Towns collection, rendering courtesy SummerHill Homes, rendering by Robert Becker

YIMBY: What day are you most looking forward to on this project?

Mehran: Well, in another couple of weeks, we have the first residents coming, that’s going to be a big day. I wonder who they are and why they bought the house, and what they’re excited about and I’m excited to get to know them.

When the first buildings open on Bollinger, the first residential building, the first apartments, that will be tremendous. I want to know who they are. That’s what I’m interested in because office customers are companies in the Bay area, and there’s never a huge surprise, but the residential here is a new product. It’s going to be exciting.

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