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Chili's Bar and Grill on Locust Street in Walnut Creek Calif. Tuesday June 23, 2009.Through thick and thin downtown Walnut Creek draws plenty of investor interest. This building was just bought by an investor.(Dan Rosenstrauch/Staff)
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WALNUT CREEK — Several property purchases and a new yogurt shop backed by a former "Survivor" champion indicate that downtown here still wields a magic touch, despite a miserable economy.

Commercial realty investors — with the most recent deal coming a few days ago — have snapped up choice sites in downtown Walnut Creek. Yul Kwon, who won "Survivor: Cook Islands," this month opened a Red Mango frozen yogurt store in the city's urban core.

"Downtown Walnut Creek is one of the best retail locations in the entire Bay Area," Kwon said. "Opening a store in this economy is a frightening proposition. This recession has been hard for everyone. But downtown Walnut Creek is poised to grow when the economy rebounds."

Property investors who recently bought an array of downtown parcels also exude confidence about the region's future. But they also see an opportunity to buy promising properties on the heels of a softening of prices for commercial properties downtown.

Market watchers believe prices are down 10 percent — maybe even more — for some retail and office parcels. At the height of the market a few years ago, some downtown retail buildings sold for $500 a square foot. Some of the recent sales are more in the $400-a-square-foot range.

Garo Keadjian's family investment group scooped up a restaurant site occupied by Chili's Bar & Grill. He believes in the staying power, through thick and thin, of downtown Walnut Creek.


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"We are not short-term investors and we believe this thing is going to turn around," Keadjian said. "We buy for the future and Walnut Creek is a good city to be in. This was a good opportunity to buy a quality property."

Among the known purchases in recent months:

n"‚The Z Gallerie Home Furnishings site on Mt. Diablo Boulevard near Locust Street was bought on June 18 for $3.5 million or $407 a square foot. The buyers knew that Z Gallerie had filed for bankruptcy and wouldn't be a tenant.

n"‚The Chili's building on Locust Street near Cypress Street was bought in April for $2.3 million or $398 a square foot.

n"‚The Contra Costa Board of Realtors paid $2.4 million, or $167 a square foot, in late April for a building on Olympic Boulevard near Alpine Road.

n"‚A two-parcel property at North Main Street and North California Boulevard was bought on Christmas Eve. Cole European, an auto dealership, and a Bank of the West branch occupy the buildings. Local investor Don Bruzzone headed up the buying group.

"The buyers are a group of local investors who believe in Walnut Creek," said David Schnayer, a CM Realty broker who arranged the purchase of the North Main-North California properties. "They think that whatever is happening with the economy, downtown Walnut Creek will survive and continue to prosper."

The deal for the Z Gallerie site underscores buyer confidence in downtown Walnut Creek. Three of the four property sales involved sites that had tenants that would generate a flow of rental income.

But SLP Properties I LLC, the buying group led by Alamo-based entrepreneur Scott Sherwood, wasn't spooked by the knowledge that bankrupt retailer Z Gallerie would exit the property by the time the sale closed.

"Some local people have wanted to get into the market over the past few years, but found the properties too expensive," said Forest Gherlone, a broker with Cornish & Carey, a commercial realty firm that represented the Z Gallerie building buyers. "They see some opportunities now."

Others hungered for the choice retail morsel, despite the vacancy.

"I had probably three to five buyers who were willing to pay over $3 million for the property," said Jim Roessler, a partner with realty brokerage Roessler Investment Group, which represented the Z Gallerie site sellers. "This is a good property at a good price. If the market comes back, it's going to be a pretty good deal."

That stretch of Mt. Diablo Boulevard is deemed a hot spot.

"There's a lot of potential activity near by," Gherlone said. "You have the Mark Morris Tires site, which was bought by Vornado. You have a Neiman Marcus proposed a couple of blocks away."

Kwon believes establishments such as his Red Mango yogurt outlet have a great chance at success downtown because people in Walnut Creek and adjacent cities hunger for quality offerings.

"The initial reaction to Red Mango was fantastic," Kwon said. "We were delighted with the response from the community. You have a customer base that is well-educated and into nutrition and healthy foods."

Only a decade or two back, Walnut Creek lagged behind San Francisco, Oakland and San Jose in prominence.

Now, its retail and restaurants top Oakland's. They rival the best San Jose can muster. And downtown Walnut Creek is worthy of being in the same conversation as San Francisco and Beverly Hills' famed Rodeo Drive.

"There is a critical mass of offices, retail, and restaurants, in downtown Walnut Creek," Schnayer said. "Walnut Creek is kind of the hub of the East Bay."

Reach George Avalos at 925-977-8477 or gavalos@bayareanewsgroup.com.