By Meghan Hall
No more than five years ago, Bay Area developers and commercial real estate experts would have been hesitant to delve into the Oakland market, believing that its market fundamentals were not adequate enough to make projects pencil. Now, the tides have turned and Oakland has transformed into one of the most accessible and affordable Bay Area CRE markets—and developers are diving right in. With entitlements for nearly 540,000 square feet of industrial development at 5441 International Boulevard underway, Bridge Development has acquired nearly 24 acres from General Electric in a transaction that closed at the end of October. Bridge Development paid $37.845 million for the property, or about $192 per square foot, according to public documents.
“Bridge’s unique value proposition is to work closely with sellers and brokers to acquire sites that present many development challenges that run the gamut from environmental to entitlement,” explained Tom Ashcraft, a senior vice president at Bridge. “The more difficult the development, the more Bridge is able to leverage its expertise to solve problems that others deem as too challenging.”
As of this writing, Bridge Development did not return The Registry’s request for updated comment.
In January of this year, Bridge Development filed a request for environmental review for remediation and redevelopment site in January of this year. City documents indicate that Bridge plans to demolish all eight industrial buildings on the property except for the front portion of Building 1, which would be incorporated into a new building totaling nearly 540,000 square feet. Just under 529,000 square feet of the new structure would be dedicated to warehouse uses, while 10,000 square feet would be designated as office space. 93 dock doors, 360 parking stalls and more than 100,000 square feet of landscaping are a part of the project plans.
The original buildings on the property were constructed between 1924 and 1975 and are part of the 57th Avenue Industrial District in Central East Oakland. The 24-acre property is a sizeable development opportunity in a competitive market that must increasingly rely on infill-based development. General Electric has sought to redevelop the property since 2010, but has run into complications due to both historic and environmental considerations. Additionally, the original draft EIR found that remediation that took place in the 1980s had failed to adequately remove toxins from the ground and buildings on site. Ashcraft stated that the challenges were appealing to Bridge, who had its eye on the property for some time before coming to an agreement with GE.
In 2017, GE had agreed to sell the site to Bridge Development, and as of January of this year, Bridge was under contract to purchase the property. Ashcraft stated at the time of Bridge’s original interview with The Registry that the transaction would close upon receiving entitlements from the City of Oakland and that Bridge had intended to break ground during the fourth quarter of this year.
“Bridge anticipates moving forward with the construction of the project as soon as possible,” Ashcraft said. “Bridge believes there is a strong demand for this project in this location and does not expect that to change as the economy ebbs and flows.”
According to a recent third quarter industrial report released by brokerage firm Colliers International, the Oakland Metropolitan Industrial Market could use new inventory. The local industrial submarket has held vacancy rates below three percent over the past four years, and overall average asking rents are nearing the $1.00 per square foot triple-net threshold. Colliers notes that there is very limited building base inventory, but even with a general lack of industrial space for lease and sale, most businesses are renewing in place, a positive sign for Bridge Development as it works to bring its new warehouse to market.