The team at LCD purchased a derelict 250,000 square foot warehouse at the corner of Mateo and Industrial. At the time of purchase, the warehouse was used by a bankrupt toy company to store stuffed animals.
There were numerous challenges that had to be overcome in converting the Toy Factory. First, the property was in an area south of Sixth Street that was not zoned for residential purposes, so the LCD team had to navigate the entitlement process in order to secure the necessary Artist-in-Residence designation. Once proper zoning was secured, there were various technical deficiencies. The property had no interior parking, no green area, the ground floor was elevated 50 inches above the street level, there were no sidewalks and no setbacks from the adjacent properties. At the time of purchase, the property had an assessed valuation of $1.9 million.
Though no mainstream bank was willing to provide construction financing for new development company seeking to be the first mixed-use project in an unproven area, the LCD team finally secured financing from Fremont Savings. The partnership provided all of the equity. Clive Wilkinson and Don Bearney were the architects and Swinerton was the general contractor.
The Toy Factory conversion was completed on time and on budget. A total of 110 live-work units occupied the top floors and there were 12 double-height commercial spaces on the ground floor. The LCD team had successfully negotiated for a small market and a restaurant to activate the commercial space. They had configured 147 on-site parking spaces and landscaped both the street and a 7000 square foot urban park on the lower roof of the building. A rooftop pool and 8000 square foot deck were added. Though the lender had presumed it would take 18 months to sell out the condominium units, all the units were secured under contract within 30 days of getting its TCO.
The Toy Factory Lofts project was an extraordinary success that catalyzed the redevelopment of an entire section of downtown that had previously been abandoned. The assessed value of the property skyrocketed to nearly $70 million. More than 50 new businesses and close to 250 jobs were located in the newly converted structure.