Oakland's Renaissance Revealed
This morning, we were just blown away by the 400-person turnout for Bisnow's Oakland State of the Market event—and our first here across the Bay—at Marriott City Center. While development is red hot, we learned the peskiest problem is labor. (In Shakespearean terms, they do not love the labor lost.)
Oakland holds the title of being a top turnaround city, home to the fastest-selling homes in the US, says City of Oakland Mayor Jean Quan, who delivered the keynote. Just last week Oakland was named the No. 5 best city for attracting VC. (Which is why it's so bogus the city didn't make People's 50 Most Beautiful People list.) She’s particularly proud of Oakland’s ability to attract people internationally, noting the $1.5B Chinese investment for the Brooklyn Basin project—a signature property on the water, she says. Why else does Oakland rock? It’s a big gateway for bringing California agriculture into Asia, she says. The resto scene isn’t too bad either; "If you’re a foodie like me,” she says, this is the place to be. One problem: a shortage of hotel rooms, and the few in the pipeline should help absorb that demand.
Ellis Partners SVP of development Dean Rubinson is celebrating a milestone today, marking his ninth year at the company. He calls Oakland his adopted hometown and he can't think of anything better than rebuilding it and investing in it (Ellis has done a ton to transform Jack London Square). He says as it becomes more difficult to develop in S.F.—thanks to more "Prop Ms and don't build high on the waterfront" measures—more developers will look at Oakland. It doesn't make sense to rent in S.F. when you can do the same for half the price here, in a transit rich environment. (You can live in Oakland for a reasonable price and make it into S.F. in time to be an extra on Silicon Valley.) He thinks Oakland's residential will take off first and doesn't see office happening in the near term. In the last dot-com push, tech firms were flocking to Oakland. Now non-tech tenants are being priced out of S.F. and filling Oakland spaces. Those types of tenants are filling up 1111 Broadway, which Ellis bought late last year.
City of Oakland director of planning and building Rachel Flynn wants to recapture retail loss happening in the city, with the Broadway corridor having a chance to become more of a retail hub. The downtown Sears building there is under contract, which she hopes happens because it's an important site. West Oakland is a city of itself, five to seven times the size of Emeryville and a key area when it comes to the port and industrial jobs. BART stops are underutilized and she wants to maximize development around them. The plan to build a whole city around Coliseum City is the most ambitious because they are starting from scratch, but it also has the most potential. Oakland taking off is not a question of if, but rather when. Oakland's months-old economic study is already outdated; areas like Chinatown are now quickly becoming desirable.
ACCO Engineered Systems regional director Bob Weisenberg works in all major metro areas on the West Coast, and he thanks his lucky stars we live right here because the growth is so dynamic and exciting. (He's also got Oakland street cred, having graduated from St. Mary's.) You don't have to go far outside the Bay Area to places like Sacramento to see a substantially different environment. These days it's not as cool to be a sheet metal worker or pipe fitter, however, even though wages are good. Recharging the mechanical contracting industry with a fresh batch of workers is a big challenge, and he's reaching out to community colleges and high school programs to train youngsters to get into the trade and stay put.
Architectural Dimensions prez James Heilbronner, who moderated, spit off some crazy population growth projections over the next few decades. He's wondering where construction workers live; a shortage of affordable housing affects the labor pool, says Bob, because those workers prefer to live close to where they work versus driving from far away. It's bad for the environment and we need to make it easier for those workers. (The morning radio lobby isn't gonna like that.) With new energy codes implemented each year, more cities are trying to up the ante to do it better, says James. Bob reminds panelists that buildings with a LEED stamp need to be maintained that way and kept at that level or it's all for not.
Turner Construction GM Dan Wheeler thinks Oakland's on the cusp of getting ready to bust out. His company does about $800M a year in the Bay Area, with about $200M of that in corporate interiors and special projects. Oakland clients include the airport and Kaiser Center. Rising commercial rents in S.F. will start driving tenants to Oakland, he predicts. He's already seeing evidence of the exodus; a good friend is moving her architecture office to Oakland. With more work, the challenge is getting qualified labor that's ready and available. Subcontractors are taking extra measures to recruit from Reno and Vegas. During the last cycle uptick, cement and steel costs were rising, and copper was off the charts. Now he's not seeing a material escalation, but wages continue to go up.