Photograph by Ryan Olein

Risky Business: David Word and three colleagues took a chance when they bought the Pruneyard five years ago, when the ecnomy was flagging and the stores were empty. Their gamble has paid off.

The Pruneyard: From Ghost Town to Boom Town

As new improvements to the shopping center wrap up, manager David Word prepares to move on

By Cecily Barnes

Late on a spring night, the Pruneyard Center is quiet, except for the hum of an occasional vehicle passing on Highway 17. Five years ago, this silence would often last an entire week. Tomorrow morning however, starting at 6:30 a.m., it will be another story completely. The parade will begin with the early birds, traipsing into the Campbell Coffee Roasting Company and Le Boulanger for coffee and pastries. By 11:00, the Men's Room, Gabi Jewels, El Burro and Barnes & Noble, along with many of the shopping center's other 50 tenants, will be bustling too. Not until well past midnight will the last janitors at the Rock Bottom Brewery or Boswell's lock up and head home, leaving the center quiet once again.

In the course of one 20-hour day, the restaurants, retail outlets and specialty stores that make up the Pruneyard Center will together gross more than $150,000. The hotel and office buildings will combine to provide the center with another healthy chunk of revenue. By year's end, the center will have grossed approximately $60 million.

The Pruneyard will also provide the city of Campbell with $555,000 in sales tax. It is one of the city's single largest sales tax contributors.

Merchants in the Pruneyard and the city of Campbell couldn't be happier about this success. Five years ago, the Pruneyard was a much different place. Fifty percent of the retail spaces stood empty, and sales tax revenue was 70 percent lower than it is today.

Bill Denves, of the Men's Room, is an old-time barber with perfectly combed white hair and an off-white cardigan. He has been in the Pruneyard since it opened in 1970, and remembers the early 1990s vividly.

"It was pretty bleak back then," he says. "Stores were just leaving left and right." In Denves' opinion, poor management was the reason business took a nose-dive.

In the early 1990s, former owner Fred Sahadi, who started the center in 1970, had defaulted on a loan from the HomeFed Bank of San Diego. Sahadi ended up turning the property over to the bank and to another lender, Security Pacific. HomeFed operated the shopping center from down south for a while, but then it too went bankrupt. The federal Resolution Trust Corporation took over, and then Bank of America took a stab at running the shopping center and office complex.

Every few months a different man in the same suit presented himself as the Pruneyard's manager, but nothing was done to keep the place leased or the tenants happy.

But more than just poor management was contributing to the Pruneyard's decline. A local recession was sweeping across the commercial real estate market as a result of overbuilding, forcing square-footage prices down. The fallen real estate prices at the Pruneyard caught the eye of the four San Mateo businessmen at William Wilson Associates, who eventually bought the property. And last year, the publicly traded company Cornerstone Properties bought the entity, Pruneyard Associates, which was established in 1994 by the four men from San Mateo.

David Word was one of those men. Sitting in the Campbell Coffee Roasting shop, Word orders a cafe latte with lowfat milk. He slips two packets of Equal into the mix and sits down, pulling an aerial photograph of the old center--mounted on a cardboard base--from under his arm.

"California's economy was very depressed," he explains, referring to the early 1990s , just before he and his partners came on board. "Many properties had been foreclosed and office space had become kind of a bad word in investment circles. When anything is out of favor, there are opportunities."

Word says this matter-of-factly. It is understood that this particular opportunity turned out favorably. He and his pals went over the numbers again and again, and decided they would either strike gold or fall flat. As with any big investment, it was a huge gamble; one they were willing to take.

"These properties were at low levels we might never see again in our entire careers," Word says. "We set out to buy these depressed properties with the attitude that we could add value. We could not have predicted, however, that California's economy would roar back."

Word and his pals bought the Pruneyard with million-dollar renovations in mind. Before they could move forward, however, they needed the Campbell Planning Department to approve their designs, and the City Council to okay the entire project. This task proved relatively easy.

"The City Council approved our plan. Whether they bought it enthusiastically or thought, 'at least it's better than what we have now,' I don't know," Word says. "But they approved us."

The entire center needed to be upgraded for the 1990s, Word says. His partner, Chris Meany, drafted plans to transform the Pruneyard from "'60s and '70s-style retail boutiques--with no visibility and no parking"--into something that suited the lifestyle of people today.

The old Bank of America building, which fronted onto Bascom Avenue, was torn down and rebuilt in the corner. "This freed up parking and gave us much more visibility," Word explains. Next, a two-lane road was laid directly through the middle of the center, allowing shoppers to drive directly to the store they wanted.

Finally, Word and Meany studied Campbell's demographics and sought out tenants that were best suited to the people who lived in the area.

"We had done a lot of market research about what the demographics were, and we thought they were great for an entertainment venue," Word says. "And to us, we thought a bookstore. Given that it's Silicon Valley, there are an awful lot of dual-income households. They have high-paying jobs and disposable income."

Word and Meany sought a series of anchor tenants--including Barnes & Noble, Left at Albuquerque, the Outback and the Rock Bottom Brewery.

Where the "old" Pruneyard had come to rely entirely on faithful customers heading to a certain shop, the center now had a new brand of foot traffic.

Merchants like Denves the barber, who had survived on his solid, faithful customer base, suddenly had a surge in the sale of retail products like cigars, shampoos, flasks and other knick-knacks.

"There's a wedding store right around the corner and people will come in and buy something for the ushers, five of this or five of that," Denves says, explaining how the other stores have contributed to his own business. "We have fancy razors, leather goods, shaving cups."

Denves also began stocking cigarettes to supply people who work in the Pruneyard towers.

"No place else here sells them," Denves says.

Just last Thursday, work was completed on the newest addition to the Pruneyard--the third "tower" in the office complex. The new parking garage, and a major hotel expansion will complete the already revitalized Pruneyard. And David Word's work will be done.

In a few months, Word says, he will be gone. He will likely move his office to Palo Alto, closer to his home in Woodside and his next project in Sunnyvale. The Pruneyard will continue under the ownership of Pruneyard Associates, which is owned by Cornerstone Properties. Check the New York Stock Exchange to see how the center, and David Word, are doing financially.

But the Pruneyard's success and contribution to Campbell will not end with Word's departure. The historic downtown revitalization continues at a rapid pace, and eventually the city hopes to link the downtown strip with its Pruneyard neighbor.

"When we look at our general plan for the city, we look at connecting those two areas," says Steve Piasecki, the city's Community Development Coordinator. "In order for that to happen, the street needs to be more attractive--pedestrian walkways, bike lanes and attractive buildings. Campbell Park is part of that attempt to make the street more attractive."

Word raises his brow skeptically at this prediction. People leaving their cars to walk from downtown Campbell over to the Pruneyard? We shall see.

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