Why New Development Is Good For Oakland, Even When It Means Competition
New development is taking hold in Oakland and helping to support the projects already there as it adds to the desirability of the area. That's why we're excited to hear from our expert panelists at Bisnow's Oakland State of the Market event Feb. 23 at Scottish Rite Center.
We caught up with some of our panelists to get their expectations for this year (and talk deals and projects).
Harvest Properties partner Awais Mughal is focused on the office market. Oakland's less than 4% vacancy is unprecedented, Awais tells us, and Harvest recently purchased Oakland's historic Leamington Building for $19M. He says it will be very important to watch where rents go and whether that creates new office development downtown. In general, he believes new development is a good thing for existing assets, because it shows Oakland is becoming a destination for tenants—rather than simply an overflow market from San Francisco.
Thompson Dorfman principal Bruce Dorfman tells us everything he's seeing in the market bodes well for growth.
In the multifamily space, a number of large-scale projects have been approved, though only three institutional multifamily projects have been built downtown in the past decade, he says. Bruce expects some of these new developments to break ground this year—and hopes Thompson Dorfman's 234-unit mixed-use project at 23rd and Webster streets (which was just approved by the city) is one of them.
Bruce tells us several factors have kept housing from rising up in Oakland to meet demand. First, there's the state's development process, which can stretch a project timeline to five years at a minimum from site selection to leasing.
The other factor has been capital. Thompson Dorfman had the first project entitled in the Broadway Valdez district in 2014 (a project in which the firm is no longer involved), but at the time, they couldn't find significant capital that wanted to come into Oakland. That, Bruce says, has changed in the past 18 months, and with capital focusing on Oakland and the downtown in particular, it should drive development.
Bruce tells us he's ready to see neighborhoods form in downtown Oakland. "Downtown Oakland is one place I'm glad to see competitors going in," he says. "It adds to the desirability of living in this area."
Lane Partners principal Drew Haydel tells us he believes 2016 is the year construction will really take root in Oakland. Everyone has been talking about Lane Partners non-stop since its JV with Walton Street Capital developed Uptown Station at the former Sears Building, which Uber snatched up last year in a $123.5M buy.
Lane Partners is also involved in a large mixed-use development at the 2100 block between Telegraph and Broadway. The development team for the 2100 Block includes Alan Dones (another one of our distinguished panelists) of the Strategic Urban Development Alliance (SUDA).