Housing might replace shuttered Denny’s in Campbell

A 45-year-old local fixture in Campbell abruptly closed last month and could become a new housing development.

The Denny’s restaurant at 2060 South Bascom Avenue in Campbell operated at the location since 1976. Two weeks ago, it shuttered with little notice.

“We regret to inform you that as of 10/31/21 at 2 p.m., Denny’s has closed its door due to a lease issue,” a notice taped on the front entrance read. “We would like to thank you all for your patronage and Denny’s loyalty over the decades.”

The notice has since been removed, along with all the trademark Denny’s signs, leaving the building sitting empty amid busy Bascom Avenue. The property owner, Florida-based Commercial Net Lease Realty, declined to comment about future plans for the slightly more than one-acre lot.

But the city might have an idea.

As Campbell officials explore new possibilities for housing in one of its most bustling and vibrant neighborhoods, the lot where the empty Denny’s sits is among roughly 200 potential locations identified by the city for new housing development.

Campbell lists more than a dozen properties along Bascom Avenue, including the Pruneyard Shopping Center district and the Shell gas station at the corner of Bascom and Campbell avenues, as potential housing sites, city documents show.

At least two property owners in the area are already eyeing the opportunities, Community Development Director Rob Eastwood said.

It’s too early to know if this vision will be realized, city officials said.

“This is the very first draft,” Eastwood told San José Spotlight of the potential housing sites. “We still have to sharpen our pencils and look closer at each site.”

A plan to bring more housing

Under Campbell’s current General Plan draft for 2040, the city wants to encourage more mixed-use development—and housing in general—in the Pruneyard district and surrounding area, said Councilmember Sergio Lopez, who represents the Pruneyard area and Dry Creek neighborhood that borders the former Denny’s site.

“The Pruneyard is one of the biggest commercial centers in town, and it’s a wonderful jewel,” Lopez told San José Spotlight. “The future of housing at Campbell, as I see it, is to extend the walkability to this area where you can take your kids and go out and not have to worry about a whole lot of car traffic.”

The current proposal calls for a change in zoning on Bascom Avenue, which is designated general commercial. The revised plans would allow housing and smaller-scale commercial buildings along the busy corridor sandwiched between Los Gatos and San Jose.

The west side of Bascom Avenue, where the Pruneyard shopping center is located, would be rezoned into a mixed-use area. The east side of Bascom Avenue, where the shuttered Denny’s sits, could be zoned as “neighborhood commercial” and permit either residential, mixed-use or commercial projects with a height restriction of 35 feet.

The city has to plan for roughly 3,300 housing units mandated by the state through its current housing element cycle, and local lawmakers intend to evaluate all their options.

The city wants to amend the plan to change the zoning to only allow smaller commercial developments in the area, Eastwood said.

“Then separately, through the housing element, we have to designate some of these sites for housing,” he said.

Vice Mayor Paul Resnikoff, who served on the city’s Planning Commission for several years before running for office, declined to comment on the proposed plan.

“At this point we have reviewed changes suggested by the General Plan Advisory Committee but no changes have been adopted yet, and nothing is final,” Resnikoff said in an email, adding he wants to avoid discussion outside of city meetings.

More questions remain

The Denny’s property is a prime location on a busy intersection next to Bascom and Campbell avenues, catty corner from the Pruneyard shopping center and about one mile from the light rail station.

Because of its location, and depending on the zoning designation, a residential development could be constructed, and the developer could take advantage of the state’s density bonus law, which allows up to 50% more units and a reduction in parking requirements.

This is not the first time in recent years that Campbell considered redeveloping the site.

In early 2020, the council shot down a plan to build a Chick-fil-A to replace the restaurant after residents voiced heavy opposition to the project. Dry Creek residents cited concerns of traffic spilling into the nearby neighborhood. They provided detailed evidence of how drive-through lines clog residential neighborhoods with similar configurations, showing Google images of traffic congestion at Chick-fil-A locations in Sunnyvale and Santa Barbara.

Lopez said the city is aware of the traffic concerns in the district.

“This could all change, as it’s not finalized,” he said. “But I’m open to whatever gets brought forward.”

Campbell will still have to study any proposed plans and the environmental impact reports, which start next year, Eastwood said.

Realistically, Campbell won’t see new housing development in its Pruneyard district until at least 2023, he said.