Bringing industry back to Oakland

So something I’ve really wanted to write about for a while and never got around to is to actual barriers to industrial business attraction in Oakland. I hope that at some point in the future, I will get a chance to write a longer post about this, full of all sorts of links and data and such, but this will have to do for now.

So as we keep being told, the whole idea behind the industrial preservation and the new industrial zoning is to create “certainty.” I don’t have a problem with this, and, as I’ve said before, I don’t have a conceptual problem with the industrial land use policy the city recently adopted, although I think there are some specific areas where the Council made some very bad decisions. I also don’t have a general problem with the new industrial zoning code, although I again have some problems with the details.

Anyway, I want to talk about this mostly because I’m hearing Nancy Nadel say over and over again things like “We’ve just completed industrial zoning, which means we can now begin working on business attraction.”

So when I was working as a market researcher at a commercial real estate brokerage, specifically in industrial real estate, there were two very clear barriers to locating businesses in Oakland, and I can tell you for a fact that the zoning was not one of them. Certain politicians and bureaucrats have really latched onto this claim and just say it over and over and over again until my ears bleed, and nobody ever seems to question them on it. I don’t know who they’re talking to, but this was just not a concern for our clients at all.

What was worrisome to our clients? Two things. The first one is, of course, crime. Our crime problem is an issue for business attraction for two reasons - personnel and material. If people are afraid to come to work where you’re located, your business suffers from a reduced labor pool and won’t be able to attract quality staff. The much, much bigger problem though is materials. When people complain about our crime problems, they mostly talk about violent crime, which is legitimate. But we also have a serious property crime problem, and when being in Oakland means that you’re significantly more likely to get your business broken into and your materials stolen, that’s a really good reason to locate in Emeryville instead. And this is why I want to laugh when I keep hearing about attracting green technology such as solar panel manufacturing to West Oakland. Look - businesses here can’t even keep their copper wire safe - do you honestly think anyone in their right mind is going to put a factory full of silicone in West Oakland? No way. If we’re serious about business attraction, we have to deal with the crime issue, and I think we all know that we aren’t going to accomplish that with the same Council that has been letting things deteriorate for years.

Issue #2? Infrastructure. So despite what Nancy Nadel seems to think, Oakland has some of the lowest average asking rates for industrial space in the entire Bay Area. Mostly, that’s because our property is so undesirable. The crumbling warehouses that exist in much of Oakland’s industrial areas aren’t suitable for most of the type of businesses we want to attract. Nancy Nadel keeps talking about bringing biotech - biotech companies want to locate in fancy new light industrial business parks that have all the nice modern amenities. There are, of course, other kinds of businesses that have fewer needs and could use some of our old warehouses just fine, if only they weren’t falling apart. It is not unusual that the cost of bringing the ancient industrial space in West Oakland into conformity with modern safety codes is greater than building an entirely new building. So the issue isn’t that the rent is too expensive (because the property owner wants to leave their property vacant in homes it will be converted for housing, as some people claim), but that the necessary infrastructure improvements that will make the property usable are too expensive. Nancy Nadel choose to blame property owners for this, saying that they are not paying for the improvements themselves because they’re “greedy.” Any Councilmember who was serious about industrial business attraction would, of course, be looking for ways to work with property owners to deal with the problem instead of deciding that they’re the enemy.

Anyway, if we want industrial business in Oakland, we need to provide appropriate space for them to operate. Sean Sullivan has proposed emulating models of successful downtown redevelopment efforts to create appropriate space in West Oakland. That is, the redevelopment agency could do something like we did with Forest City, identifying a developer willing to build an R&D/light industrial business park and assisting with parcel consolidation and perhaps providing some sort of subsidy for any necessary environmental remediation. The West Oakland redevelopment fund isn’t exactly flush with excess cash, so there are some limits on how much financial assistance we could provide, but we can take advantage of bonding capacity if we have a real shot at getting someone to build actual desirable business space. My understanding is that this is something the Oakland Partnership is hoping to work on, and I do hope we can get something moving relatively soon.

Reinventing the wheel. Slowly.

I write today for Novometro about the Oakland Partnership.

I hope to find the time to write more about last Friday’s Economic Summit soon, although I am, as usual, behind on my blogging schedule. Anyway, I wanted to comment on something Dan Lindheim talked about in one of the panels, and was also quoted in the newspaper about:

Dan Lindheim, the director of the Community and Economic Development Agency, said finding spots for business to locate is not as easy as finding spots for housing opportunities, in part because many businesses are content to stay where they are even if they are only making a low-level profit.

He did say the city continued its work on a data base on what parcels are available for different types of commercial opportunities.

“We’ll certainly be able to (operate the data base) with staff,” he said. “What we want to ultimately be able to do is to get it so that it’s available online so people can really have individual access. We’re not quite there yet.”

I just don’t understand why Oakland’s city government feels the need to constantly reinvent the wheel. In case you don’t know much about commercial real estate, let me give you the rundown. There are these things called commercial real estate brokerages. When you see those big signs on the buildings or vacant lots saying things like “For lease. Call so and so,” that’s the number for the broker representing that property. Of course, most properties don’t get leased simply by having someone drive by and seeing a sign and thinking a building looks pretty. Most properties get leased when someone calls up a broker and says something like “Hi Jake, I want to move my business to Oakland and I need at least 10,000 square feet near a freeway with at least 2 grade level loading doors.” Then the broker sends an e-mail to one of their market researchers and says “all the spaces in Oakland, Emeryville, Alameda, and Berkeley half mile from freeway, 10k-12k sf 2 grade doors, asap.” It’s the same with office space, although needs there tends to be more generic.

Then the researcher will look that up in their database of available properties. Large brokerage houses usually maintain their own databases, based on the monthly listings released by all the other brokerages and marketing flyers sent out and a variety of other sources. Smaller companies usually can’t afford their own researcher on staff, so they just buy a subscription to two existing databases, CoStar and LoopNet. Both are up to date and comprehensive. A LoopNet searching subscription costs less than $40/month if you pay for a year upfront.

Anyway, I realize that what Lindheim is describing isn’t the exact same thing, but it’s close enough to be totally pointless and wasteful. I mean, do the taxpayers of Oakland really need to be paying someone to make and maintain a list of available properties when we could instead just be like “You want to space for your biotech company, here’s a broker’s number?” (Although in that case, the answer would be more like “We don’t have any. Go to Emeryville.”) Opportunity maps made sense for housing development, but with business attraction, especially industrial business attraction where the needs are complicated and unique to each company, there’s just no point in replicating work that other people are already doing, and are doing a better job of it that the government ever will.

The sad story of subarea 8

People will tell you that the new industrial land use policy is about providing certainty and predictability to developers, business owners, and property owners. Adopting a set of objective criteria, developed through a public-input process, to use in evaluating applications for General Plan amendments is a planning tool. In theory, it should ensure that approvals are not arbitrary, or based on the political influence of any particular developer or business owner, and that the decisions made are those appropriate for the city as a whole. It would provide objective measures to evaluate whether the land in question has potential for job creation and industrial business use, what sort of economic impact the conversion will have on the city, and whether a proposed residential development will contain appropriate measures to buffer the new homes from nearby industry, in order to avoid creating the oft-threatened domino effect of conversion after conversion.

And if that were the case, all this would be fine. But it isn’t. Nancy Nadel and Pat Kernighan both stated on March 4th that the provision of community benefits in any new residential project on industrially designated land should be one of the criteria for conversion. Dan Lindheim threw a minor fit because the Council’s motion did not specifically identify community benefits as part of the criteria staff was to return with (I found this utterly bizarre - the Council didn’t give any direction as to what criteria should be, only that they be “comprehensive.” Nothing prevents staff from returning with criteria that include community benefits - in fact, I would be shocked if they didn’t.) Community benefits have nothing to do with predictability or the appropriateness of conversion.^*

As illustration, let me tell you a about a little place called subarea 8. Subarea 8, a 50 acre section of East Oakland, is bordered by 92nd and 98th Avenues, San Leandro St. and E Street. Read more

Industrial Land Use: So what just happened?

Better late than never, right?

Okay, so last week I talked about what the Council has been doing with respect to industrial land retention for the past few years. In September 2006, they agreed to retain a number of the City’s industrial subareas solely as industrial, but could not reach consensus on others. Instead, requests for conversions in these areas were to be considered on a project by project basis. So this was kind of where we stood until February, when Mayor Ron Dellums submitted a proposed Industrial Land Use Policy to the City Council, asking them to declare: Read more

Industrial Land Use Policy: How did we get here?

The LUTE, as I explained last week, divides Oakland’s land into 14 different categories, two of which are reserved for industrial uses. Of course, zoning for something is no guarantee of creating it, and Oakland has been struggling with a dwindling manufacturing base for decades. In recent years, more and more longtime local employers have been disappearing. Some, like Mi Rancho, went to cheaper parts of the Bay Area. Some, like Red Star Yeast, shut down over environmental issues. Others, like Granny Goose, shifted production to cheaper domestic locations. And outsourcing and off-shoring continued eating at the industrial base - quota elimination in the textile and apparel industries resulted in the loss of much of Oakland’s garment industry earlier this decade. A 2005 study from McKinsey & Co. (PDF!) paints a grim picture for the future potential of heavy industrial activities (and the low-skilled jobs that accompanied them) in the region. Much of our industrial land has sat vacant or underutilized for years, and remains so today. Nonetheless, Oakland, because of our Port, remains a potentially attractive location for those industrial businesses that do wish to remain in the Bay Area, and the current supply of industrially zoned land provides room to accommodate growth in the sector.

Meanwhile, Oakland struggles with an ever more pressing need to create new housing units in order to meet our regional housing allocations. As housing prices (and therefore land values) rise, it has become increasingly difficult for developers to profitably deliver moderately priced new housing. Our ample supply of underutilized industrial land presents an opportunity to for developers to employ economies of scale, and produce more reasonably priced units in significant numbers on the large and comparatively cheap parcels in industrial areas.

By 2005, the City was looking at proposals for rezoning industrial land for several large housing developments, including Wood Street in West Oakland, Arcadia Park in East Oakland, and Fruitvale Gateway in Central Oakland. As more residential developers expressed interest in industrial parcels, planning staff sought direction from the City Council about how to respond, resulting in a discussion of industrial land use at the June 14, 2005 meeting of the Council’s Community and Economic Development Committee (CED). The staff report (PDF!) for the item discussed the dual pressures of providing space for jobs and business attraction as well as housing production, particularly if we hoped to attract more retail.

CED agreed that something should be done, and asked staff to return with a more detailed report and some specific recommendations regarding industrial land conversions, and staff returned to the Committee on November 8, 2005 with more information as requested. Recognizing that there was no one solution that made sense everywhere, staff divided the land in question into 17 distinct subareas, grouped by existing land use characteristics and major street boundaries. The maps below show the location of each subareas, although they’re a bit difficult to read.

West Oakland

Central Oakland

East Oakland


The subareas ranged widely in size, from a meager 26 acres to almost 400, some supporting thousands of jobs, and some barely over 100. The table below displays the size of each subarea in acres as well as the number of existing jobs in it.



Staff also mapped the current land use in the area. Industrially zoned areas ranged from successful, with as much as 97% of land being currently used for industrial purposes, to weak, with as much as 34% of land currently vacant.



By September 2006, the Council had reached relative consensus about what to do with at least some of the land. The Council voted keep subareas 2, 6, 7, and 14 solely as industrial, keep 3 and 13 industrial except for allowing retail along the freeway, and keeping area 4 industrial between the freeway and Tidewater, but could not reach agreement about subareas 1, the other half of 4, 5. 8, 9, 10 , 11, 11a, 15, 16, and 17. They decided that all these areas needed more analysis, and kicked them back to the Planning Commission’s Zoning Update Committee, who held hearings between December 2006 and July 2007 on the items. The Zoning Update Committee declined to make recommendations for each subarea, instead suggesting the requests for General Plan amendments in these areas should be considered projected by project.

And this is where we stood until a few weeks ago. Check back tomorrow to find out what we actually did (with video!).

CED holds onto industrial zoning, for now

Update on yesterday’s post. CED did not pass the proposed zoning onto Council. After the meeting got started late due to the previous committee running way over, then a super long discussion on the Oakland Commerce Corporation’s contract, there really wasn’t any time left to discuss the industrial zoning plan. They took public comment (although cut the speakers’ time to 1 minute after giving everyone else 2), then agreed that the proposal needs a lot of work and decided to discuss it at the next meeting (April 8), placing it first on the agenda for that date. The Committee members indicated that they agreed with the speakers that it was unfair to spend years welcoming artists and then suddenly try to ban them, and presumably the revisions to the proposed zoning code will contain some protection measures for existing work/live residents.

In other Committee news, the Public Safety Committee received an interesting report about crime statistics (PDF!). They requested the information last fall, but when the police came to that meeting, they basically said that they had no idea where the numbers in the report the department had submitted came from, but that they were certain the numbers were wrong. The Committee told them to get their act together and come back with some real information.

Now they have and the results are interesting. For example, out of 8,045 robberies reported last year in Oakland, only 2,637 were assigned for investigation.

Oh, and did I mention that the District Attorney’s office is basically refusing to provide the Council information about what the results of the cases referred to them by the Police Department? Yeah. It’s amazing.

The buffer zone is stupid

So yesterday I wrote for Novometro about the zoning update plan going to the Community and Economic Development Committee (CED) on Tuesday. If you aren’t already familiar with the details, I encourage you to click through for an overview. Basically, this is part of the ongoing process to update our zoning to conform with the General Plan.

This afternoon, CED will be voting on a proposal (PDF!) to do just that for the parts of Oakland zoned General Industrial and Business Mix. Now, if you’ve been paying attention, you know all about General Industrial and Business Mix because one of the hot items on last week’s Council agenda was how we plan to deal with them. Read more

Photo Friday: Industrial Underutilization

So last night, as I was rereading the Trib story about the industrial land-use policy, I realized that what bothered me about it wasn’t so much that what it said was wrong or misleading (there was some of that, but relatively little), but that it didn’t mention any of the interesting things that happened, and failed to provide any context for understanding the issue.

Anyway, I’d like to provide some of that context, but I’m not going to get to it today. Please come back next week, when I plan to be just as one-note about industrial preservation as I’ve been recently about Measure Y. It’ll be more interesting, I promise. You’ll get to learn all about the East Bay industrial real estate market, what the real barriers are to industrial business attraction in Oakland (hint: it isn’t fear of developers), and how the Council finally stood up to staff/the Mayor on something (resulting in a little spat between De La Fuente and Lindheim at the meeting). Best of all, you will be treated to a very sad story about a little place called subarea 8. It’s going to be so much fun! But for today, I just want to share a few pictures I took during a recent walk along Oakland’s grand industrial boulevard, Mandela Parkway. Click through to view. Read more

Nancy Nadel to artists: move.

Wow. So I had a post for today about the industrial land-use policy that the Council approved on Tuesday. I figured it was mostly ready, but just needed a little AM editing. Then I read this. Did the reporters and I watch the same meeting? It certainly doesn’t sound like it. They sort-of got the basic idea right, which was that the Tidewater Area was exempted from the proposal, while West Oakland wasn’t. But beyond that…I don’t even know what to say. Now I have to entirely rewrite my blog, and I don’t know when I’ll be getting to that.

In the meantime, let’s look at another, related, issue. The whole reason we’re talking about this at all is because Oakland is riddled with abandoned, or at least underutilized, industrial buildings. This is depressing for Oakland, but good for one segment of our population. The exodus of industry from Oakland has left us with plenty of spaces where artists and craftspeople can find affordable rents, ample room to work, and three-phase power. Read more

So many meetings, so little time

Tonight is lousy with important meetings. Blighted buildings, industrial zoning, Measure Y, and Children’s Hospital are all competing in the Wednesday night time slot. How is a concerned citizen supposed to choose? If only we had TIVO for public meetings. Anyway, take a look at what’s on the calendar. Read more

Industrial Preservation: it isn’t as simple as it sounds

Nancy Nadel speaks frequently about the need to preserve our industrial land and our industrial jobs. How she plans to do this isn’t exactly clear. So far, it seems like her approach mostly involves trying to stop developments that have overwhelming community support and offering no alternatives.

Anyway, do we want industrial in West Oakland or not? Nancy Nadel says yes when she’s talking about jobs, but no when she’s talking about air quality. People need jobs. They also need to breathe.

High levels of lead and other heavy metals were detected at Oakland’s McClymonds High School, according to tests performed by students there…particle fallout in a third story classroom found lead levels 17 to 54 times above what the U.S. government considers safe. Other potential toxins found in the classroom were mercury, manganese, nickel and arsenic.

The students suspect the pollutants were coming from industrial plants in the West Oakland neighborhood.

There is room in West Oakland for both housing and jobs. But finding the right balance is complicated, and is going to require serious thought and commitment from the City Council - it isn’t enough to be “forming a brainstorming group” after 12 years in office.

The myth of industrial preservation

In this week’s Oakland Globe, Clinton Killian offers a sweeping condemnation of Ron Dellums’s Chief of Economic Development Dan Lindheim and his efforts to quash development around the city:

Mr. Lindheim is referred to at City Hall as “Dr. No” because he has become a project killer of the types that the mayor supports and would benefit Oakland. He has consistently contradicted staff’s positive support for projects and placed his Dick Cheneylike red “NO” on them, forcing staff to rewrite their recommendations. This is done even though the projects conform to the city’s stated policies and have been supported by the majority of Oakland citizens.

There’s a lot that gets lost in the vague dialogue of industrial preservation. If you listened to Nancy Nadel, Dan Lindheim, or Cecily Burt, you might feel fairly certain of what’s going on: This is a choice between preserving high-paying industrial jobs in Oakland or pushing them out to build housing for the wealthy. If only the reality were so simple! One problem is that the term “industrial preservation” implies that there is something there to preserve - that someone other than the security guard is working at the American Steel factory. Rhetoric of industrial preservation is being used to fight the Gateway Community Development Project, a transit-oriented development which would create 810 units of workforce housing and provide 30,000 sf of commercial space on land that is currently being used as a self-storage facility. dto510 has discussed these deceptions in the past. Read more