The Dublin property once earmarked for Ikea will go to expand a planned lifestyle center.

Ikea announced last week it would not build the store at Hacienda Drive and Interstate 580 it had planned since 2003, which would have been the third in the Bay Area after Emeryville and East Palo Alto.

In a news release, Ikea officials said company research found those stores were adequate to serve customers on both sides of San Francisco Bay, so it would sell the 14-acre Dublin site to Blake Hunt Ventures of Danville. Blake Hunt is building upscale shopping center Emerald Place on an adjacent plot of land, west of Hacienda Crossings.

Although the news came as a surprise to city officials, they appeared pleased with the latest development plan for the highly visible site, once targeted for office buildings before Ikea came along. Dublin Mayor Janet Lockhart said the city had been trying to help Blake Hunt expand the footprint of 140,155-square-foot Emerald Place but there weren't many options until Ikea folded its tent.

"High-end retailers like to locate around each other and they need space to do that. This will be very beneficial to that project," Lockhart said.

No retail tenants have yet been announced for Emerald Place, but Blake Hunt said in a news release it anticipates "a specialty grocery store, a diverse offering of restaurants, apparel stores, home goods and retailers on par with other high-end lifestyle projects on the West Coast."

Lifestyle centers are defined by the International Council of Shopping Centers, a trade association based in New York, as having an open-air format, upscale orientation with proximity to affluent neighborhoods and a range of 150,000 to 500,000 square feet of gross leasable area, with at least 50,000 square feet of national specialty chain stores.

With the Ikea land added to its existing 13-acre site, Emerald Place more than doubles to approximately 300,000 square feet on 27 acres.

Matt Kircher, managing partner of Terranomics, the retail leasing division of NAI BT Commercial, said the extra square footage will definitely help Blake Hunt in leasing negotiations for Emerald Place. Lifestyle center shoppers want to feel that "it's got everything and it's got a lot of punch to it," he said.

"I think Blake Hunt were facing the battle that their site is - it sounds crazy - but too small. The kind of retailers they are trying to attract, you need more massing there."

Blake Hunt is now in the process of redesigning Emerald Place with a "Main Street" running east-west and parallel to Dublin Boulevard and Martinelli Street. The center will be visible to travelers along I-580, and parking will be better distributed throughout the property, said Jerry Hunt, Blake Hunt co-founder and president.

The developer plans to incorporate gathering places, water features and a town green, catering to pedestrian shoppers enjoying the outdoors.

"The canvas is bigger on which to paint, so it gives you more options and more to consider," Hunt said.

Neither Blake Hunt nor Ikea would provide details of the land sale. Lockhart said the value would be at least $1 million per acre, possibly more because it is already entitled for retail. Ikea originally paid $29.9 million for 27.4 acres, later selling off 13 acres to Blake Hunt.

In an earlier incarnation of the site, Commerce One planned to build four office buildings envisioned as "digital Dublin," home to satellite offices of Oracle Corp., Cisco Systems Inc. and other technology giants. But Commerce One walked away from the plan after the dot-com bust.

Similarly, Ikea's pullout had more to do with business patterns than any problems with the city or the site itself.

In a letter to Lockhart, Ikea's real estate manager in the western United States, Doug Greenholz, said the Dublin store was planned along with East Palo Alto after the Emeryville store opened to regular crowds. The East Palo Alto location opened in August 2003, and Ikea also opened a West Sacramento location in March, serving the Central Valley and Interstate 5 corridor.

"Since then, we have assessed our Emeryville and East Palo Alto stores fully and evaluated actual regional consumer shopping patterns in a much more detailed manner," Greenholz wrote. "Based on the regional draw of Ikea, we have concluded that the needs of our Bay Area customers are being served effectively by the existing stores."

Both Bay Area stores are doing well, and Ikea increased its U.S. sales volume from $2 billion to $2.5 billion last year, said Joseph Roth of Expansion Public Affairs for Ikea North America, based in Conshohocken, Penn. "Two stores are sufficient for the time being."

Kircher said Ikea's decision was not surprising, given the constantly changing nature of the retail environment. Yet it still caught the city off-guard, and Hunt was surprised as well.

"Until very recently we had no idea they were not going forward," he said.

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