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Construction continues on the new Kaiser Permanente San Leandro Medical Center in San Leandro, Calif., on Thursday, Oct. 3, 2013. (Anda Chu/Bay Area News Group)

SAN LEANDRO -- Once home to factories that churned out Dodge automobiles and Kellogg's Frosted Flakes, the city's west side today is dominated mostly by graying warehouse buildings, isolated from anything that a worker in the area might expect to find.

Nary a restaurant, coffee shop or hair salon can be found in San Leandro's 2,000-acre industrial area, even though the bulk of the city's jobs are there. With even more daily traffic expected when the new Kaiser Permanente San Leandro Medical Center opens in 2014, city leaders are working to change things.

"In the 1950s and 1960s, we had a great balance between industry and the residential (areas) and tax-wise that was great for us," said Chad Pennebaker, president of Douglas Electronics, who has lived in San Leandro for 65 years and witnessed the area's downturn. But with the demise of many manufacturing jobs, he said, "that's what kicked us in the butt later on,"

This summer, the city commissioned a "Next Generation Workplace District Study," by San Francisco consulting firm Freedman Tung + Sasaki, to try to identify ways to revitalize the area that comprises nearly a quarter of the city.

On Wednesday, Pennebaker and about 100 other area business people, residents and city leaders listened as consultant Greg Tung talked about what the study found.

"I am really glad to hear you guys talking about this," said Jeff Musgrove, president of Applied Fusion, a high-tech welding and advanced manufacturing company across the street from the new Kaiser site. "We have been dug in for a long time, four decades, and so I am concerned about blighted buildings and property."

In his presentation, Tung identified a priority development area, or "spine," along Merced Street and Westgate Parkway, which he said the city could rezone or permit to allow for a diversity of shops.

He noted the area's strengths: proximity to Oakland International Airport, the Bay Bridge and Interstate 880, as well as building connections to the high-speed Internet Lit San Leandro fiber optic network. That includes the West Gate Center, the reborn Chrysler factory now anchored by Walmart and Home Depot and other retailers. The onetime Kellogg's plant is now a vacant industrial park.

The area that was shaped by the local railroad line in the 1950s still provides two-thirds of the city's jobs and has only a 5 percent vacancy rate, Tung said, but its weaknesses include a lack of amenities and obsolete buildings.

He recommended enhancing the area's crosswalks, striping bike lanes and parking stalls, and adding street lighting and bus shelters. He also suggested exploring a more compact BART shuttle route through the area and adding a cluster of food kiosks.

Food offerings were a topic of great interest at the meeting.

School board member Diana Prola was not keen on the kiosk idea. "We don't need anything that makes it look like it's more fast food. We need some nice restaurants," Prola said.

Pennebaker agreed that some new restaurants would be a good addition to the area.

"We've got a couple restaurants at the Marina, and we've got a couple restaurants downtown, and there is a Denny's, but not a nice restaurant," he said.

Cynthia Battenberg, the city's community development director, suggested a $150,000 facade improvement program that would allow businesses to remove unattractive razor wire and barbed wire like that now seen on Hester Street.

Others talked about allowing live-work units on the outskirts of the industrial area.

While no decisions have been made to allow residential units in the industrial zone, Mayor Stephen Cassidy said, "Let's talk about it, because we really do feel that our industrial area is in many parts underutilized and we want to take it to a much higher level."

Claudia McHenry, vice president of the League of San Leandro Neighborhoods, said her excitement is tempered by the city's financial constraints.

"I think the ideas are there," she said. "I think the biggest challenge of course is the elimination of the (redevelopment) funds and the recession, and where does your penny go when you need $1,000 and you only have a penny."

City officials now will seek more input from an Industrial Area Working Group, made up of business owners, local workers and residents. An update will go to the City Council in February.

Ashly McGlone covers San Leandro, San Lorenzo, San Ramon and the Washington Township Health Care District. Contact her at 510-293-2463. Follow her at Twitter.com/AshlyReports.