Catching up with Ralph Borelli – Real Estate Baron Started Out Cutting ‘cots

By Katherine Conrad, San Jose Mercury News, August 13, 2006

Commercial real estate dealmaker Ralph Borelli grew up in East San Jose next to an apricot orchard where his job was to cut open the succulent fruit and lay it out for drying.

“They used to let me cut the apricots until I had a cut on every finger. Then I was relegated to the pit boy.

Born and raised in old Santa Clara County, young Ralph cut his teeth on land deals and real estate acquisitions. He recalls attending city council meetings with his father, Nelo G. Borelli, an Italian immigrant who founded the Silicon Valley real estate company in 1955.

In 1973, Borelli took over the small firm and built it into a commercial real estate engine that manages 4 million square feet, has more than 1,000 tenants and employs 30 brokers and their assistants.

During his career he has brokered some of the biggest land deals in Santa Clara County, including KB Homes’ Tuscany Hills project of which he is most proud, and the Elmwood transaction valued at $60 million with Milpitas and Santa Clara County.After closing a retail deal in Morgan Hill for 66 acres that he began working on in 1976, Borelli only had this to say: “In hindsight, I should have bid the job by the hour.” Born in this valley, he has been a witness to its metamorphosis, even as he has played a role in driving it. His boyhood valley of orchards became a land of tract homes and industrial campuses, and it is now growing into higher-density housing and office complexes. Borelli calls it “land recycling”.

TITLE: CEO, Borelli Investment CompanyAGE: 52CAREER: Began workings as a real estate broker at 19 and worked at an auto wrecking yard for four years. EDUCATION: San Jose State University, 1976, B.A. in business administration with emphasis in real estate. FAMILY: Wife, Gina, and three daughters, Marissa, 23; Kristina, 21; and Janelle, 18.

 

FIVE THINGS TO KNOW ABOUT RALPH BORELLI
	1. Stock cars don’t have speedometers, so Borelli doesn’t know exactly how quickly he’s sped around the Grand Prix track. His best guess is125 mph. “We were going into a curve on the race track, so it was pretty hairy.” He and his crew, the Historic Stock Car Racing Series, raised about $35,000 for the Canary Foundation by giving rides along the track to the highest bidders.
	2. He just closed a land deal for 66 acres in Morgan Hill that he began working on in 1976.
	3. Borelli Investment has forged an alliance with an Asian-American brokerage firm, GD Commercial Real Estate in Milpitas, to sell commercial condos to overseas investors. A delegation from China is scheduled to visit in September.
	4. He was named Land Broker of the Year by the Association of Silicon Valley Brokers.
	5. His first real estate deal was selling a house in downtown San Jose for $7,500. He received 75 $100 dollar bills stuffed in a paper bag. Where did the cash come from? Borelli didn’t ask.

Q You started in commercial real estate more than 30 years ago, and you have watched the economic development of the valley. Is the valley transforming itself again?

A The orchards are all gone. The Morgan Hill deal has a vineyard on it. Most development deals today are recycling property. We’re involved in a number of transactions where we’re tearing down industrial buildings that aren’t that old. We tore one down in January that was 22 years old… There was nothing wrong with that building. But it was in an area of San Jose that was being transformed from industrial to residential. There’s still such tremendous demand for residential housing.

Q This is controversial, as some say the city is demolishing its industrial base that employs people in favor of houses.

A In my view, there’s still a lot of buildings that are functionally obsolete. And there’s a lot of manufacturing that is gone and is not coming back. And there’s still a tremendous demand for housing.

Q But once houses are built, the recycling process is over. Houses are permanent. Where do you stand on this?

A In my opinion as our market matures, you are going to have a lot more office type of buildings rather than manufacturing buildings because the manufacturing is gone and I don’t think it’s coming back.

Manufacturing in this valley for the most part now is software-related. You can have a multistory office building filled with software engineers and that’s manufacturing. It’s a different type of product. You have to go vertical with the price of land. It’s a natural evolution of our marketplace.

Q You’ve watched the orchards bulldozed for housing, now buildings your company constructed get torn down for either more housing or higher office buildings. I understand that you are a businessman with a family to feed and employees to pay – but do you feel any nostalgia after all the changes?

A Time marches on. People have got to decide where the priority is. Are you going to provide enough housing for people or artificially choke off housing and keep raising the price? People wonder why housing is so expensive. It’s so simple, it’s supply and demand. If you want this bucolic neighborhood with a bunch of ranches around, then be prepared for high prices, because I don’t think people are going to leave here.

Q The recycling trend: What do you think about that?

A As an economy, you need to adapt to changing times in the marketplace. Otherwise the market is going to pass you by… Those buildings are obsolete; they should be torn down. If you don’t change with the times, the private sector is going to pass you by. Then you’re going to have a wasteland.

Q What do you think about Yahoo’s recent acquisition in Santa Clara and its plans to demolish the buildings and construct a new campus, possibly a headquarters?

A I think a move like that is outstanding for Silicon Valley because you have the bellwether company making a huge commitment to maintaining their headquarters here, and we need that. Fortunately Yahoo has enough of a margin that they can afford to pay. Apple is another example, as is Google. These companies can afford to stay here and pay their employees enough so they can afford to live here. But if you manufacture coat hangers and you don’t have enough of a margin, you can’t be here and you won’t be here.

 

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Contact Katherine Conrad at kconrad@mercurynews.com or (408) 920-5073.

 

By Katherine Conrad, San Jose Mercury News,August 8, 2006 For too many years Morgan Hill residents have spent most of their shopping dollars — a whopping $100 million annually — outside their city limits.They had little choice. City officials tried to avoid the cookie-cutter look of big-box national retailers and focused instead on nurturing the city’s downtown. Over time, city funds slowly dwindled as tax dollars found their way elsewhere.Now the South County city is coming late to the big-box party, but on its own terms. With the construction of a 650,000-square-foot shopping center across 66 acres — Morgan Hill’s largest retail project to date — it’s eager to grab nationally recognized retailers to fill the center’s stores before they land somewhere else.

But Morgan Hill could face a struggle to reverse the trend of dollars flowing to South San Jose’s Oakridge Mall and to nearby Gilroy, where shoppers have made the Gilroy Premium Outlets one of the most successful outlets on the West Coast.

Scheduled to open in summer 2007, the currently unnamed center near Highway 101 and Cochrane Road has been 30 years in the making and will boast the region’s largest Target store at 127,000 square feet. It also will have Petco, Staples and Cost Plus World Market, according to Garrett Toy, Morgan Hill’s director of business assistance.

Developers John DiNapoli of San Jose and Daryl Broman of Oakland plan to spend more than $100 million to build the center, which may feature a movie complex as well as national restaurants, such as Chili’s.

“The city of Morgan Hill for most of the last 10 years has not been pro-development for big-box retail,” said Jim McMasters, a retail expert with the Colliers International commercial real estate brokerage, who handled leasing for Gilroy Crossings, which opened in 2004.

“But what that really did was open the door to Gilroy to explode with retail.”

Affluent residents

Morgan Hill’s well-educated population of 33,000 has a solid median household annual income of $82,000, the kind of demographics retailers crave. And while they may enjoy patronizing their quaint downtown, clearly they also open their wallets wide in national retail stores.

City officials are doing their best to strike a balance by serving their residents without abandoning downtown merchants.

“We asked the developers for a mix of uses that would not directly compete with the downtown,” said City Manager Ed Tewes. “And a lot of attention was paid to the physical design of the center and how it is laid out to distinguish itself from shopping opportunities in the north and south.”

Tewes said Morgan Hill is looking for a center that doesn’t look like a “series of boxes surrounded by a sea of parking.” He hopes the careful landscaping with shrubs, oak and hawthorn trees will give it a feel that doesn’t compete with downtown.

“Morgan Hill is working very hard on the downtown and we’ve been working with them,” DiNapoli said. “We’ve brought in local brokers who have helped give them ideas about what do with the downtown.”

DiNapoli noted that this approach supports all of Morgan Hill, not just his development, and that suits him just fine. “We’re long-term holders,” he said. “We’re not just building it to sell it.”

Time will tell if another South County shopping center can succeed or if it’s simply too late. But Tewes noted that regardless, city policies aren’t to blame for the 30 years it took to develop the 66-acre site. The city’s general plan has designated the area for commercial development since 1969.

“But painting it red (for retail) in the general plan doesn’t make it happen,” he said.

Ralph Borelli, chief executive of San Jose’s Borelli Investment, began talking to landowners, including the wine-making Guglielmo family, in 1976 about selling their land for development. Litigation among the landowners who inherited the property and over the Cochrane Road Assessment District also took years to settle.

“Stubborn” city

Borelli, who said the deal took the longest to close of any in his career, recalled that developers tried to build houses on the site and then offices, but each time they hit a brick wall with Morgan Hill officials, who insisted on retail, but only the right kind of retail.

“It wasn’t for a lack of trying,” Borelli said. “We lost a significant amount of deals to Gilroy. But I have to hand it to Morgan Hill, its planning commission held out for regional retail and that is what they will get.”

But McMasters said cities rarely succeed in trying to ignore retail trends.

“Morgan Hill has lost ground by being stubborn and waiting, and not wanting the big-box look,” McMasters said. “But retail is a dynamic industry. You can’t protect yourself when the customer benefits by the chain store.”

Contact Katherine Conrad at kconrad@mercurynews.com or (408) 920-5745.

Morgan Hill Mall to Open Next Summer; City Aims to Stem Flow of Shoppers to Gilroy

By Katherine Conrad, San Jose Mercury News, August 8, 2006

For too many years Morgan Hill residents have spent most of their shopping dollars — a whopping $100 million annually — outside their city limits.

They had little choice. City officials tried to avoid the cookie-cutter look of big-box national retailers and focused instead on nurturing the city’s downtown. Over time, city funds slowly dwindled as tax dollars found their way elsewhere.

Now the South County city is coming late to the big-box party, but on its own terms. With the construction of a 650,000-square-foot shopping center across 66 acres — Morgan Hill’s largest retail project to date — it’s eager to grab nationally recognized retailers to fill the center’s stores before they land somewhere else.

But Morgan Hill could face a struggle to reverse the trend of dollars flowing to South San Jose’s Oakridge Mall and to nearby Gilroy, where shoppers have made the Gilroy Premium Outlets one of the most successful outlets on the West Coast.

Scheduled to open in summer 2007, the currently unnamed center near Highway 101 and Cochrane Road has been 30 years in the making and will boast the region’s largest Target store at 127,000 square feet. It also will have Petco, Staples and Cost Plus World Market, according to Garrett Toy, Morgan Hill’s director of business assistance.

Developers John DiNapoli of San Jose and Daryl Broman of Oakland plan to spend more than $100 million to build the center, which may feature a movie complex as well as national restaurants, such as Chili’s.

“The city of Morgan Hill for most of the last 10 years has not been pro-development for big-box retail,” said Jim McMasters, a retail expert with the Colliers International commercial real estate brokerage, who handled leasing for Gilroy Crossings, which opened in 2004.

“But what that really did was open the door to Gilroy to explode with retail.”

Affluent residents

Morgan Hill’s well-educated population of 33,000 has a solid median household annual income of $82,000, the kind of demographics retailers crave. And while they may enjoy patronizing their quaint downtown, clearly they also open their wallets wide in national retail stores.

City officials are doing their best to strike a balance by serving their residents without abandoning downtown merchants.

“We asked the developers for a mix of uses that would not directly compete with the downtown,” said City Manager Ed Tewes. “And a lot of attention was paid to the physical design of the center and how it is laid out to distinguish itself from shopping opportunities in the north and south.”

Tewes said Morgan Hill is looking for a center that doesn’t look like a “series of boxes surrounded by a sea of parking.” He hopes the careful landscaping with shrubs, oak and hawthorn trees will give it a feel that doesn’t compete with downtown.

“Morgan Hill is working very hard on the downtown and we’ve been working with them,” DiNapoli said. “We’ve brought in local brokers who have helped give them ideas about what do with the downtown.”

DiNapoli noted that this approach supports all of Morgan Hill, not just his development, and that suits him just fine. “We’re long-term holders,” he said. “We’re not just building it to sell it.”

Time will tell if another South County shopping center can succeed or if it’s simply too late. But Tewes noted that regardless, city policies aren’t to blame for the 30 years it took to develop the 66-acre site. The city’s general plan has designated the area for commercial development since 1969.

“But painting it red (for retail) in the general plan doesn’t make it happen,” he said.

Ralph Borelli, chief executive of San Jose’s Borelli Investment, began talking to landowners, including the wine-making Guglielmo family, in 1976 about selling their land for development. Litigation among the landowners who inherited the property and over the Cochrane Road Assessment District also took years to settle.

“Stubborn” city

Borelli, who said the deal took the longest to close of any in his career, recalled that developers tried to build houses on the site and then offices, but each time they hit a brick wall with Morgan Hill officials, who insisted on retail, but only the right kind of retail.

“It wasn’t for a lack of trying,” Borelli said. “We lost a significant amount of deals to Gilroy. But I have to hand it to Morgan Hill, its planning commission held out for regional retail and that is what they will get.”

But McMasters said cities rarely succeed in trying to ignore retail trends.

“Morgan Hill has lost ground by being stubborn and waiting, and not wanting the big-box look,” McMasters said. “But retail is a dynamic industry. You can’t protect yourself when the customer benefits by the chain store.”

Contact Katherine Conrad at   kconrad@mercurynews.com or (408) 920-5745.

Borelli Investment Co. Leads Team Effort to Keep
Approximately 175 Jobs in San Jose

Business and government cooperation results in clean approval for the sale of a warehouse used for textile rentals and commercial laundry services in North San Jose industrial park area.

San Jose, Calif., July 11, 2006 — The owner of a 53,760 square foot warehouse on Junction Avenue in San Jose was ready to move. Part of a national company that specializes in uniforms and other branded identity apparel programs and services, managers of the local facility felt the time was right to relocate its operations to another building in San Jose.

Brokers from Borelli Investment Company quickly identified a potential buyer—Alsco. Alsco is a global leader in a similar line of business, with service centers in more than 120 locations and ten countries worldwide. Every day, the privately owned company picks up, cleans and delivers millions of flat linens, uniforms, chef’s outfits, cleanroom garments, dust control items, and more. Equipped with a Class One clean room—and located near Highways 880, 101, and 680, as well as Mineta San Jose International Airport—the building was a perfect location for Alsco’s proposed San Jose service center.

The challenge was the transaction needed to close quickly. And posing a major obstacle was the fact that the City of San Jose had rezoned the area around the warehouse for industrial park uses. This made the textile rentals and commercial laundry services performed in the warehouse a nonconforming use under the city’s code.

“Obviously, the existing business could continue to provide its services after the rezoning, as long as it occupied the facility,” explained Tom Zolezzi, one of two brokers from Borelli Investment Company who worked on the transaction. “But to facilitate the sale to Alsco, we needed to get a ruling from City of San Jose Planning Department that because Alsco’s operations would be nearly identical to the selling party’s, this was a legal, nonconforming use.”

Dealing with the Spin Cycle

At first, the challenges appeared to be difficult, with much uncertainty spinning around the sale. Business timetables for both Alsco and the seller required a short contingency period and quick close. If that did not occur, both businesses would be forced to seek alternate sites outside of San Jose, costing the city the 75 jobs at the present facility, plus 75 to 100 jobs at the new San Jose facility the seller planned to occupy.

The initial reading of the zoning ordinance from the City of San Jose Planning Department caused timing concerns—with the department requesting 30 to 45 days or more to review the application before issuing a decision that might or might not allow the sale to proceed.

But Tom Zolezzi and Chris Anderson of Borelli Investment Company—along with Gerry DeYoung from planning and engineering consultant Ruth and Going—worked closely over a very short timeframe with the staffs of both the City of San Jose Redevelopment Agency and the San Jose Planning Department, and a solution was found.

“With everyone on the same page, we were able to address the San Jose Planning Department’s concerns and prove that Alsco’s business represented a legal, nonconforming use,” said Zolezzi. “Contingencies were removed, and escrow proceeded, with the transaction closing on May 19th. We negotiated a good price for Alsco, and met both companies needs to move in a timely manner.”

The transaction involved not only the Junction Avenue warehouse with its nine dock doors, two grade-level doors, clean room, and large parking and truck area—but also 5.32 acres of prime land in North San Jose, perfect for future expansion, if needed. Selling price was approximately $5 million.

“The city’s vision and cooperative efforts accelerated the process and ensured we could meet Alsco’s timetable,” Zolezzi remarked. “This truly saved the 150 to 175 jobs that would have gone elsewhere, making it a clean win for the City of San Jose, as well as the buyer and seller.”

View Alsco Corporate website
Having celebrated its 50th anniversary last year, Borelli Investment Company is one of the oldest commercial real estate firms in the Santa Clara Valley.  The company provides a full range of commercial real estate services-from development and construction management to land sales and consulting for sales and leasing. More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting www.borell-inv.com.

Contact: Ralph Borelli, CEO Borelli Investment Company 1770 Technology Dr. San Jose, CA 95110 Ph: 408.453.4700 Fax: 408.453.4636 E-mail: ralph@borelli.com

http://www.borelli.com

Borelli Enters Strategic Alliance with GD Commercial Real Estate

GD Commercial named the exclusive broker to the Asian marketplace for
hot business condominium category.

San Jose, Calif., July 6, 2006 — Borelli Investment Company, a long-time leader in commercial real estate services and a pioneer in the development of business condominiums in Silicon Valley, has announced that it has entered a strategic alliance with GD Commercial Real Estate to market its business condominium projects to the Asian marketplace.  The exclusive marketing agreement with GD Commercial covers two current Borelli business condominium projects — AirTech Office Condominiums, at 1754 Technology Drive in San Jose, and Junction Office Center, at 2051–2055 Junction Avenue in San Jose.

“Business condominiums have been a very hot category in Silicon Valley for several years,” said Ralph N. Borelli, chief executive officer of Borelli Investment Company. “The Asian community has shown a strong interest in our product from the beginning. We decided it was time to formalize our marketing efforts to this community, and when we were searching for a strong partner that knew the market, the GD Commercial name kept coming up.”

Borelli Investment Company and GD Commercial will work together to develop collateral material, web sites, and advertising in several Asian languages for Borelli’s existing business condominium projects. GD Commercial has well-established contacts not only in the Bay Area, but also with business owners and investors in China and other Asian countries, who want to open operations in the U.S.

View San Jose Mercury News article about this strategic alliance.

“There is a significant amount of interest in China right now in expanding to dynamic U.S. markets such as Silicon Valley,” explained John Luk, executive managing director of GD Commercial. “We have established relationships both here and overseas that we think can work to both Borelli’s and our benefit. Borelli develops high-quality business condominiums, available in spaces as small as 750 square feet. That makes its properties very marketable.”

AirTech Office Condominiums is a two-story garden office building with 40 office condos totaling 55,870 square feet. Borelli invested $3 million in the conversion and upgrade. Amenities include high-speed Internet access, a common conference room with large video screen, individual heating and air conditioning controls, full carpeting, and coffee bars in each suite. Down payments start as low as $41,000 — with only four suites left to sell.

Junction Office Center is a two-building, two-story office complex in North San Jose’s Golden Triangle. The 77,404 square feet of space is divided into 52 offices. Tenants and visitors enter through formal lobbies with polished granite floors and high ceilings. Amenities include carpeting and coffee bars in each unit, a common conference room with large-screen video, T1 fiber optic cable for high-speed Internet access, and showers in the bathrooms to use after a run or bike ride. Borelli invested nearly $10 million in the Junction conversion. Down payments start as low as $27,900.

“With rents beginning to rise, ownership makes a lot of sense now for businesses or professional practices of any size,” Borelli remarked. “Owners can lock in occupancy costs, and enjoy tremendous tax advantages and the potential for long-term appreciation. It really doesn’t make sense to lease if you can own.”

“We look forward to working with Borelli to market these two outstanding projects, and then continue to explore other projects in the future that provide mutual benefits,” Luk added.

Borelli Investment Company is one of the oldest commercial real estate firms in the Santa Clara Valley, with more than 50 years of experience. The company provides a full range of commercial real estate services—from development and construction management to land sales and consulting for sales and leasing. More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting www.borelli.com.

GD Commercial is a leading, partner-owned US commercial real estate company comprised of real estate professionals including licensed brokers, financial analysts, research professionals, and marketing specialists. The company’s range of services includes office, industrial and retail leasing; tenant representation services; property acquisitions and dispositions; corporate advisory services; mortgage financing; and consulting and research. Visit www.gdcommercial.com or call (800) 939-8168.

Contact: Ralph Borelli, CEO Borelli Investment Company 1770 Technology Dr. San Jose, CA 95110 Ph: 408.453.4700 Fax: 408.453.4636 E-mail: ralph@borelli.com

 

http://www.borelli.com