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File #: 2017-4886   
Type: Consent Calendar Item
Body: City Council
On agenda: 11/21/2017
Title: Recommendation to Receive Status Report on Job Creation Efforts at Alameda Point, Including an Update on the Enterprise District Marketing Strategy (Base Reuse 819099)
Attachments: 1. Exhibit 1 - Alameda Point Zoning Map, 2. Exhibit 2 - Alameda Point Building Map

Title

Recommendation to Receive Status Report on Job Creation Efforts at Alameda Point, Including an Update on the Enterprise District Marketing Strategy (Base Reuse 819099)

 

Body

 

To: Honorable Mayor and Members of the City Council

 

From: Jill Keimach, City Manager

 

Re:  Recommendation to Receive Status Report on Job Creation Efforts at Alameda Point, including an Update on the Enterprise District Marketing Strategy

BACKGROUND

 

When the Naval Air Station Alameda closed in 1996, the City of Alameda lost an estimated 18,000 jobs. Consistent with the community’s long-term vision for Alameda Point, one of the City’s priority has been to attract industries and uses that generate high-end, high-tech jobs that will replace those jobs lost and serve as a catalyst for the rest of Alameda Point and an economic engine for the City as a whole. 

In April 2014, City Council directed City staff to issue a Request for Qualifications (RFQ) from developers for an 82-acre commercial development site within the Enterprise District at Alameda Point at the same time as the RFQ for the 68-acre mixed-use Site A project. Although there were four qualified developers that responded to the RFQ, negotiations with two finalists stalled because the developers were not willing to commit to upfront infrastructure, land payments or a milestone schedule for implementing development due to the uncertainty of the commercial market in Alameda and the high cost of infrastructure.  As a result, on September 20, 2016, the City Council approved a strategy for attracting employment uses to the Enterprise District focused on Site A development timeline and its major backbone infrastructure improvements, which are crucial to the feasibility of a large-scale new commercial development to this area. 

 

There is still strong interest in large scale development in the Enterprise District, as is evident in the 65 inquiries in the Enterprise District marketing status update addressed later in this report.  However, any new development is highly dependent on the significant backbone infrastructure (new sewer and water lines, storm drains etc.) being financed and developed by Site A.  In the meantime until Site A commences infrastructure construction, staff has expanded its focus beyond new infrastructure-dependent development to strategies that target re-use of existing buildings, which can take advantage of existing infrastructure and leverage investments that are already happening in both the Adaptive Reuse and Enterprise Districts.

This report describes a more comprehensive summary of staff’s efforts to create jobs at Alameda Point beyond just new commercial development in the Enterprise District, yet also includes an update on those ongoing Enterprise District marketing efforts.

 

DISCUSSION

 

Summary

The strong leasing program of existing buildings in the Adaptive Reuse Sub-District (Exhibit 1) over the last several years, especially to high/clean tech companies, food and beverage manufacturers and makers spaces has helped to catalyze interest and investment throughout Alameda Point.  Below is a summary of some of the most recent and upcoming accomplishments for job creation beyond the ongoing leasing program, which is actively bringing in new and renewed commercial business interest:

                     Over $35 million investment in buildings in the Adaptive Reuse Sub-District, representing over 440,000 square feet - (Buildings 8, 9, 91);

 

                     Pending or completed sales of existing buildings 9, 91, and 40 in the Adaptive Reuse Sub-District  (generating approximately $16 million for new infrastructure in the Adaptive Reuse Sub-district);

 

                     An estimated 250 new employees in the Adaptive Reuse Sub-District associated with Buildings 9, 91, alone; and

 

                     Long-term lease negotiations of Building 360 in the Enterprise District for commercial high-tech use for large-scale expansion from another adjacent large building.

This new activity, in addition to existing companies like Google, Wrightspeed and the growth of food and beverage companies are drawing attention to a burgeoning environment for companies interested in unique buildings and spaces and a diverse mix of industry clusters.  The following provides a more detailed summary of the efforts being made in both the Adaptive Reuse and Enterprise District areas (Exhibit 2).

 

I.                     Adaptive Reuse Area

Leasing Strategy and Purchase Options

The City’s strategy for leasing, primarily in the Adaptive Reuse area, has been to offer long-term leases and/or leases with purchase options or first rights to negotiate purchase options for certain buildings with the goal of preserving the historic buildings, as well as attracting major building investment and high tech and job-generating tenants, such as Google, Wrightspeed and Saildrone, and targeting clusters of industries, such as clean-tech, food and beverage manufacturing users and artisan makers. Overall, the Alameda Point leasing program consists of 1.8 million square feet of commercially leased space for approximately 66 businesses with a total of about 1,000 employees.

 

Currently, there are six buildings with purchase options. These options were negotiated with financially viable users that are consistent with the City’s long-term vision for employment generating uses at Alameda Point and are strategically located along primary corridors where critical infrastructure identified in the Master Infrastructure Plan is needed to grow and attract existing and new businesses, such as West Tower Avenue and West Monarch Street. 

 

A good example is Building 91, the first building sold at Alameda Point in July 2017.  The new tenants are Admiral Maltings, a micro-malt-house offering locally sourced malted barley and ultimately employing 40 people and Almanac Beer Co, a brewery dedicated to producing seasonal artisan ales, brewed specifically to complement local cuisine.  Additionally, another new tenant in the food and beverage manufacturing cluster is due to open this fall - Urban Legend, a winery that makes hand-crafted wines that salute the varied flavors of California.  These businesses are great additions to the expanding food and beverage sector at Spirits Alley and throughout Alameda Point. 

 

Another building that just sold is Building 9.  It will be home to a renewable energy company employing 150 highly skilled, highly paid jobs.  Received sales proceeds will also contribute toward much needed new infrastructure and complement the growing clean/high tech industry cluster.   

 

Building 8, which is leased with an option to purchase will be developed into small, creative spaces to support many start-up and maker spaces including light manufacturing, workshops for artisans and craftspeople, design professionals, administrative and office uses, work/live units, along with accessory uses to support the community including cafes, restaurants, galleries and ground floor brewery.  Specifically, the development plan includes: 83,420 square feet of commercial and light industrial maker uses on the ground floor and up to 88 work/live units on the second and third floors, and 40,000 square feet of commercial roof top space containing 25 commercial work units, a community room, common open space decks and a beer garden. Current plans are to open late 2018.

 

New Adaptive Reuse Opportunities

 

Despite strong interest and an active leasing program at Alameda Point, many of the easily occupied buildings are already leased.  There are still many chronically vacant buildings, some contributors to the historic district, that will require significant investment, similar to major development opportunities.

 

The Bachelor Enlisted Quarters (BEQ) is probably the greatest opportunity in the Adaptive Reuse area for large-scale job-generating uses.  The BEQ is over 21 acres and approximately 500,000 square feet of building area comprised of three historic buildings.  It has been chronically vacant since the Navy left (with the exception of one small portion of the building) and is severely vandalized.

 

Staff believes, the BEQ, with a strategic location in the middle of the campus-like setting of the historic Civic Core, close to wineries and distilleries, the Main Street Ferry Terminal, athletic facilities and open space, could have broad appeal to the many tech companies that desire unique and authentic spaces, and are increasingly interested in socially responsible adaptive reuse of historic buildings, such as the Twitter and Airbnb headquarters in San Francisco.  The effort to attract a major employment user to the BEQ is consistent with the General Plan Amendment (2013), the Alameda Point Planning Guide (2013), Alameda Point Zoning Ordinance (2014), which all share the overarching goals of generating new economic development and employment opportunities in existing buildings and preserving historic buildings to the extent possible. 

 

To evaluate and demonstrate, to the extent feasible, the potential of the BEQ as a tech campus and to draw the interest of potential users and developers, staff issued a Request for Proposals (RFP) for architectural services to evaluate the conceptual feasibility of the buildings as a tech-campus use and to develop concept renderings and possible floorplan configurations that could support a future RFP for a specific tech campus user or developer, if directed by City Council to pursue this option.  Staff believes this initial step is necessary to add additional certainty about how tech users’ floor plate requirements could be met, to provide some initial feedback and provide an indication of acceptance from the community and Boards and Commissions of how the dilapidated buildings could be configured to meet their needs. Through a competitive process, staff has selected BAR Architects, and is also seeking City Council approval for that contract on another staff report on tonight’s consent calendar. 

 

II.                     New Development Areas

 

Waterfront Town Center

The Site A project also includes the potential for near-term commercial and retail development at Alameda Point. Currently, Alameda Point Partners, the Site A developer, has elected to extend their Phase 1 closing date for the project.  They have until April 9, 2018 to meet all of the requirements of closing and then start construction within 30 days. 

Once implemented, the project will support the development and renovation of 600,000 square feet of permanent commercial space, including specialty manufacturing, light industrial, retail, and hotel uses, resulting in approximately 1,472 permanent commercial jobs on-site and approximately $400 million in construction work, generating approximately 2,570 direct construction jobs over the life of the project with preferences for Alameda residents. Construction of amenities, gateway improvements into Alameda Point and a new sewer line from Main Street though Site A and up to the existing pump station at the northern edge of the Alameda Point property will substantially support and help catalyze long-term employment-generating uses in the Enterprise and Adaptive Reuse Sub-districts.

Enterprise District

 

The Enterprise District is still seen as one of the last and best areas in the East Bay for new large scale commercial development.  Even with the Site A project stalled, there have been preliminary discussions with qualified users and interest from a number of commercial developers as indicated in the 6-month Status Update below.  Once the timeline for infrastructure development for Site A is more certain, negotiations can begin in earnest.  Should the City choose to accelerate any portion of the backbone infrastructure, those discussions could occur sooner.

There is also strong interest in repurposing of existing structures that have not been occupied since the Base was closed.  One of these users is a top-tiered company in the area of advanced manufacturing, office and R&D uses.  The user of this building (B397) employs high-end, skilled labor and is interested in expansion into the adjacent large existing building 360.  

6-month Status Update (January 2017 - June 2017)

Below is the 6-month update from Cushman and Wakefield, Alameda Point’s leasing agent, who has continued to pursue interested users based on the 3-phase marketing strategy approved by the City Council, which aligns with Site A’s progress. 

The table below lists the tasks and deliverables completed by Cushman & Wakefield in the most recent six-month period.  

 

 

Deliverable/Tasks

Metrics

Results as of 12/31/16

1.

Produce new Enterprise District specific marketing piece

 

Completed in first 6 months

2.

Public relations effort - article in regional press

# articles

Not yet completed - tied to Site A groundbreaking

3.

Modify website to reflect new Enterprise District availability

 

Completed in first 6 months

4.

Two enterprise District specific broker blasts per month (approx. 750 recipients Bay Area wide)

#broker blasts

6 blasts sent to 1600 mailing list

5.

Presentations to two regional brokerage house visits per month

# presentations # of brokerage houses

13 presentations 13 brokerages

6.

Weekly targeted mailer to regional tenants/users (25 weekly)

# of mailers

100 mailers

7.

Weekly phone follow-up to end user mailing recipients

# of phone follow-ups

60 phone follow-ups

8.                     Keep information active on LoopNet & Costar online marketing portals                     link                     LoopNet <http://www.loopnet.com/Listing/19767979/0-Alameda-Point-Alameda-CA>
Costar <http://property.costar.com/Property/Detail/Detail.aspx?t=14&id=9953775&popup=0>

9.

Keep information active on C&W website

link

C&W Website <http://looplink.cushwake.com/looplink/cushwake/searchresultsFL.aspx?SearchType=FSFL&VIEWSTATEID=8479249&PgCxtGuid=bcb69268-432d-4b5a-b9f8-2a3f2cc71991&PgCxtCurFLKey=LooplinkSearchPage&name=cushwakenational&QryRadioStateList=CA&QryRadioCity=alameda&QryRadioLooplinkSubmit=View+Listings&ReturnTargetUrl=%2fxNet%2fLoopLink%2fLoopLinks%2fcushwake%2fqryframeFSFL.aspx&R_LL_RB=FSFL&R_QR_C=alameda&R_QR_SL=CA>

10.

Inquiry Tracking

#inquiries

65 inquiries

 

Staff is continuing to make significant progress with redevelopment of Alameda Point, despite the delay in Site A, by working with existing and new businesses and existing buildings to retain, expand and attract active uses that draw interest in reuse opportunities.  The need for new and/or upgraded infrastructure continues to be the most significant challenge for redevelopment efforts.  Infrastructure financing, from either new development or other funding sources would accelerate the reuse of buildings and drive further interest in Alameda Point. 

 

FINANCIAL IMPACT

 

There is no financial impact to the City’s General Fund or Base Reuse Fund Budgets (Fund 858).

 

MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE

 

This report discusses job-generating uses and strategies that are consistent with the Community Reuse Plan, the General Plan Amendment and the Alameda Point Conceptual Planning Guide and the Enterprise District Approach to Development approved on September 20, 2016.

 

ENVIRONMENTAL REVIEW

 

This report is for information purposes only. No environmental review is required.

 

RECOMMENDATION

 

Receive Status Report on Job Creation Efforts at Alameda Point, including an Update on the Enterprise District Marketing Strategy

 

Respectfully submitted,

Jennifer Ott, Base Reuse and Transportation Planning Director

 

By,

Michelle Giles, Redevelopment Project Manager

 

Financial Impact section reviewed,

Elena Adair, Finance Director

 

Exhibit:

1.                     Alameda Point Zoning Map

2.                     Alameda Point Building Map