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PLEASANT HILL, CA-Work is set to begin here this week on mixed-use transit-oriented-development on county-owned land surrounding the local Bay Area Rapid Transit station. The $400-million project will replace surface parking lots with 522 residential units, a 270,000-sf office building and 35,000 sf of retail.

The developer is a public-private partnership consisting of publicly held AvalonBay Communities of Alexandria, VA, New York-based Millennium Partners the San Francisco Bay Area Rapid Transit District and Contra Costa County. James Kennedy, the county’s redevelopment director tells GlobeSt.com the project start has been awaiting the completion of structured parking to replace the existing surface parking surrounding the BART station. The $50-million project, paid for largely by the redevelopment agency, was completed two weeks ago.

That was the first phase of the project. The second phase is a 422-unit apartment project with 36,000-sf of retail, and 100 condominiums, at a cost of approximately $200 million. The apartments and the retail will be built over the next 24-30 months, and 20% of the units will be leased to people with lower incomes. The condominiums are probably 36- to 40 months out given market conditions, Kennedy says.

The $150-million office component is a bit of a wild card because its construction will be market driven, Kennedy says. If an anchor tenant comes along sooner, it could go up along with the rest of the project. If not, it will follow closely on its heels.

Only the land for the condos will be sold. The remaining land is being leased to the developers by the county for a 99-year terms. Kennedy says the county’s benchmark return for the money it has invested is 6.5%. “The county’s return is enhanced substantially by getting an office tenant sooner rather than later,” he says. “We would start to accrue ground lease revenue for what is now a vacant site much earlier if that happens.”

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