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Libby Schaaf: Make Oakland Easier for Developers

San Francisco Office

Yesterday morning Oakland Mayor-elect Libby Schaaf, joined by the city's top developers, explained why the stars are aligning--and what's still a little off center--at Bisnow's 450-person event at the Marriott City Center. 

Schaaf, an Oakland native, says Oakland's too beautiful to "sell its soul for growth"--and it doesn't need to. To grow the city without causing displacement, she's encouraging big development in the right places. And we've got plenty of those, she says. (Unlike a "city unnamed" across the Bay, we still have dirt, she says.) There are places begging for development and she's working hard to make it easier. That means "performing your EIR for you to encourage that growth." 

Yesterday, we broke the news that EVB, an 80-person ad agency, will transplant its HQ from S.F. to Oakland at 1738 Telegraph in early 2015. The lucky landlord is Citrine Advisors (president Jerry Smith, above, was a speaker). The decision to move from 55 Union was partly driven by EVB’s desire to be part of Oakland's inspiring art, music and tech scene. Their new 10k SF office couldn't be much closer to culture (Fox Theater is across the street). The former Woolworth’s Department Store is getting a custom revamp and will feature a penthouse roof deck and ground floor retail space the agency plans to use as a rotating art gallery. Expect a formal announcement from the company today.

Pankow's first project was in Oakland in 1963. Today SVP Scott Anderson sees more investment in current stock, extending the life of buildings. He'd love to see high-rises get built. He quotes a study that says the construction industry is the only one since the industrial revolution that's declined in productivity. We need to innovate to eliminate waste and drive value back to the end user. Its precast facility in Central Valley gets building components faster and at a higher level of quality, reducing on-site labor. One of Pankow's newest Oakland projects is a charter school with affordable housing developer Bridge Housing.

DCI Engineers principal Jeff Brink says in the past six months, he's seen a pendulum switch with the number of projects in Oakland skyrocketing--despite that fact that ROI isn't as high as in S.F. He's a big proponent of design-build and says that delivery system guarantees collaboration. Costs stay at a minimum when everyone gets on board early. He has a number of projects in the works with Scott's team and notes a lot of GCs have been receptive and open to doing design-build work on the private side.

Libby thanked Bisnow for "tracking her down" to come speak. (It's what we do.) She's committed to making Oakland the least irritating government in the world, which drew much applause. That won't be too hard, she says, considering how the culture of the city's workforce has changed and the new attitude of being user friendly and responsive. Also thank the "kick ass" director of building and planning Rachel Flynn, who also spoke. 

Nautilus Group president Randall Miller says his firm bought three entitled residential sites in the Temescal north Oakland neighborhood about a year ago. It's taken longer than expected to get them under construction (as in, they aren't yet), so he welcomes the Mayor-elect's comments. He'd like to see fees alleviated, specifically related to water. Contemplating an 80-unit project in a developed area, he was looking at $1M in connection fees. Contrast that to $50k water fees for projects in LA (near the desert). He says modular development and building will be key to managing construction costs. 

Turner Construction GM Dan Wheeler says absorption needs to reach a certain level before the city sees more high-rises. He's moving Turner's office to Oakland's historic Rotunda Building. While looking, he saw office rents in the $36/SF range. We need to get well above $40/SF to see high-rises in downtown Oakland. In S.F. rents are $60 to $90/SF so that tells him it's a viable market and explains the 32 tower cranes building office and residential. The price is right and the demand is there.

Woods Bagot director Riki Nishimura, who moderated, points out that his firm's office on Grant and Sutter is just 20 minutes door to door from the heart of Oakland. There's a big reason why more companies are setting up shop in Oakland vs. S.F. Direct average asking rents from 2005 have doubled in S.F. but only gone up from around $25/SF to $30.12/SF (under 20%) in Oakland.

Dan, introducing Mayor-elect Libby Schaaf, says Oakland's regulatory process also needs to improve, and he is confident she will assist. As a comparison, Dan said Turner got a full-floor permit to do TI work in S.F. in three days; the last one filed in Oakland took eight weeks. When it takes more time to get permits than the construction, that's a challenge for developers and owners to do the job cheaper and faster, and meet their commitments. Dan's excited about the uptick in interest in Oakland and thinks it's about ready to see some positive growth in development and construction.