Week of June 21, 1999
  Blockbuster Deal of the Week
   from Site Selection's exclusive New Plant database

From the Cold War to 'Star Wars':
Lucasfilms' $250 Million Campus Headed for Presidio Base

The Force - namely, a fetchingly glitzy image, a low-key approach and a ton of capital - was with George Lucas, who has won out in hotly contested competition to set up a massive $250 million, 1,500-employee corporate campus in San Francisco. Lucas will stage his major real estate production inside the Presidio, the verdant, seaside military base that closed in the wake of the Cold War's thaw.

The seven-member Presidio Trust (www.presidio.org) approved Lucas' bid to build the campus on the 23 acres of the Presidio area that's the current home of the closed Letterman Army Hospital, which will be razed for the new development. Despite the approval, several major issues must be worked out before a final deal is consummated. It may be October before all issues are resolved, observers say.


High-Pressure Lobbying Backfires

Competition for the prime Presidio property boiled down to a big-bucks battle between high-powered players from Hollywood and the real estate industry. The two finalist proposals for the Presidio acreage came from the San Rafael, Calif.-based Lucasfilms (www.lucasfilms.com) group of entertainment companies and a team headed up by two local-area - and far more traditional -- real estate developers: San Francisco-based Shorenstein Co. and San Mateo-based Interland.

In terms of capital, the two warring groups made almost equal offers.

In terms of image, many of those involved in the decision were clearly enamored with Lucasfilms' high-profile reputation as a clean, high-tech industry with major showbiz cachet. So, did it come down to who worked harder to secure the acreage? As it turned out, it came down to just the opposite. The Shorenstein group, the biggest landlord in the San Francisco area, lobbied heavily for its proposal, which would have largely consisted of some 450 housing units. A number of influential local-area figures, including San Francisco Mayor Willie Brown, called Presidio trustees lobbying for the Shorenstein proposal, the San Francisco Chronicle (www.sfgate.com) reported.

That gambit proved to be about as popular as some unholy combination of JarJar Binks and Darth Vader.

"I was getting calls from people I hadn't talked to in 20 years," one trustee anonymously complained to the press. "It offended me, and I think it offended others. The Lucas people did not do any of that."


Sweetening the Public Pot

Lucasfilms has made substantial public-interest contributions in and around its headquarters base in Marin County north of San Francisco. However, as the race came down the wire, it appeared that the Lucas proposal might have too few public amenities to suit the Presidio Trust.

Said one trustee, "There was a great deal of worry that the Lucas people were turning their backs on the public." But shortly after the Presidio Trust held first-round interviews with finalist candidates for the property, Lucas came back with an amended offer with a much stronger public-interest slant. The winning Lucas proposal includes a high-tech Presidio museum, a seven-acre "Great Lawn" that would be accessible to the public, an internship program and a plan to promote the Presidio to an international audience.


A Little Moping in Marin

The Presidio decision, however, wasn't such good news for Marin County, which has nurtured the burgeoning Lucas empire. Lucas' successful Presidio bid means that he will be relocating his wildly successful special effects unit, Industrial Light & Magic, from San Rafael, along with several smaller operations, including the George Lucas Educational Foundation, LucasArts, LucasLearning, LucasOnline and THX.

Lucas is obviously fond of the Marin area. In fact, San Rafael Mayor Albert Boro, following the Presidio decision, described Lucas as "a wonderful corporate neighbor."

Marin County, however, couldn't satisfy Lucas' real estate requirement: a campus-like setting that the Presidio property could readily supply. Some 85 percent of Marin County land is off-limits for development, designated for use as parkland, green space or agriculture. Several Marin County business leaders have criticized the area's land-use restrictions, which, they say, are causing Marin to lose expanding businesses to other nearby counties. Nonetheless, Marin County's industrial and office vacancy rates currently hover near zero percent.

That will obviously change with the uprooting of much of the Lucas empire. However, the relocations to the Presidio will unfold slowly, which will give the Marin area a chance to create other high-tech jobs, Boro says.

And Lucas certainly isn't abandoning Marin. Lucasfilms' corporate headquarters and sound mixing facilities will remain at Skywalker Ranch in Marin. In addition, Lucas says that he plans to proceed with his plans to develop parts of two ranches near the Marin headquarters. That space will be used for offices for the Lucas group's licensing, marketing and human resources divisions.


Sequels and Prequels: Major Issues Remain In true Lucas-like style, the Presidio Trust decision is now evolving into its own sequel. Or, perhaps more accurately, it's turning into a prequel. Despite the approval, Lucas' move to the Presidio won't be a done deal until a number of dangling issues are tied up.

One of them is how much rent Lucas will pay. Presidio trustees originally specified an annual rent of $5.8 million, to which Lucas agreed. However, the Lucas empire has become legendary as a Jedi Master of the business spin-off. Now the Presidio Trust and Lucas operatives must agree to how much rent will be charged to the spin-offs that are a virtual lock to be a byproduct of the San Francisco campus.

Major concerns also remain over the feasibility and upkeep of the Great Lawn. Some critics say the area won't promote the necessary level of public access and involvement. Still others wonder if the Great Lawn will turn out to be decidedly un-great.

The sloping area in the middle of the Lucas complex, says Presidio Trustee Ed Blakely, could be a beauty, or "it may be a big mud hole." The former chairman of the University of California at Berkley's City and Regional Planning Dept., Blakely thinks maintaining that landscaped swath could present major problems. Blakely has also criticized the current design of the Lucas complex buildings. They too closely resemble the facility style employed at the old military base, he says. Instead, Blakely wants more architectural innovation - something of an irony, given Lucas' rank among the era's most notable innovators.


Critics Include Parks and Conservation Assn.

Still other critics have weighed in as part of a caviling chorus that may eventually stretch out as far as the current queues for "The Phantom Menace."

Among them are officials with the National Parks and Conservation Assn., who call the real estate decision for the historic Presidio "premature." Lucas' plan, they say, still needs more of a public slant, which the Presidio Trust could ensure through incorporating several elements from competitors' losing plans.

In short, real estate issues, at least in this galaxy, have gotten complicated for Lucas.

Lucasfilms President Gordon Radley, who's heading up the Presidio project for the Lucas team, doesn't expect things to work out with the wave of a laser saber. Negotiations for the Presidio property, Radley anticipates, "will be very complex."

And that expectation evokes the succinct observation of another cinematic icon of the summer of 1999, Austin Powers. The suave and debonair Austin would probably echo Radley's assessment thusly: "Yeah, baby, yeah!"


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