| By Mike Coppinger |
OAKLAND–The robust economic recovery that seized Silicon Valley and San Francisco beginning in 2010 has largely eluded the Bay Area’s enormous East Bay. Signals of a heartier uptick—some faint and some obvious—are growing stronger, but the recovery will be bumpy, methodical and uneven, business leaders said.
With the recent arrival of innovation giant General Electric Co. to San Ramon, some hope the tech sector will lead East Bay recovery, modeling the economic reclamation that has resuscitated the economy from San Francisco to North San Jose.
“We felt that if you’re going to be anywhere, you have to be in the Bay Area,” said Bill Ruh, who joined GE 18 months ago from Cisco Systems Inc. to spearhead the location and operation of the industrial conglomerate’s new Global Software Center at Bishop Ranch. GE hopes to play a fundamental role in shaping and creating the Internet of Things, also known as the Industrial Internet, using software created by the Bay Area’s plentiful engineers.
“I think we’re going to see [global] economic growth. It is going to be steady,” Ruh said. “There’s going to be a lot of uncertainty in certain areas, and a lot of hope in others. You have to be very aggressive; you have to have great products.”
Jeanne Myerson, chief executive of The Swig Company, which has owned downtown Oakland’s signature Kaiser Center with nearly a million square feet since 2005, agreed: “It won’t be a recovery where all boats are floated. The new normal over the next five years—it is not a recovery like before. The bottom line is that there will be opportunity, but you will have to go after it,” she said.
Ruh and Myerson shared their perspectives along with three of their regional business peers as part of The Registry’s inaugural East Bay event, “East Bay Rising,” Sept. 25 at The Cathedral Event Center at The Cathedral Christ the Light in downtown Oakland. The panel represented prominent commercial property owners and real estate advisors with interests from Emeryville to Fremont.
“This is the hottest topic—the East Bay—nationally. Northern California is without a doubt the hottest market in the world. Everyone wants to know if it is too late to invest in Northern California,” said Christopher Peatross, founder, president and chief executive of Swift Realty Partners. Swift owns One Concord Center and Swift Plaza, together nearly 1.5 million square feet of offices adjacent to the Concord BART station. Peatross also has a long history of investment and ownership in the East Bay.
“The recovery is different this time. Palo Alto and most of Silicon Valley have passed the 2007 high, but the East Bay is still in its first inning,” he said. Historically, housing has driven the East Bay economy; this cycle, housing has not been a significant factor so far, and the economy is still recovering, albeit slowly. If homebuilding improves, the implications are obvious.
While Oakland lacks the dynamic growth of both San Francisco and Silicon Valley, it also typically avoids both areas’ intense downturns, panelists agreed. Geoffrey Sears, a Wareham Development partner who oversees the company’s 2.5 million square-foot life science and biotechnology campus in Emeryville and West Berkeley, said the long delivery times for new buildings and the unpredictable economic cycles make Wareham focus on the longer-term. The company recently completed a 99,000-square-foot speculative office building in downtown Emeryville, which Sears described as “healthy vacancy” available to meet tenant demand for growth.
Wareham’s investment philosophy relies on deep knowledge of its marketplace and an intense interest in local quality-of-life issues from schools to parks to transportation, as keys to making Emeryville a nice place for people and thus attractive to companies.
“If you’re a 20-something, you’re going to become a 30-something, and you’re going to have some kids, maybe, and care about schools,” said Sears, a graduate of Yale University. “All those resources are a little bit more available and fluid [in the East Bay]. You can move close to a good school district here. That’s tougher on the other side of the bay.”
Sears thinks East Bay recovery is imminent, though he doesn’t expect to see “huge, big watershed moments” characterized by companies’ initial public offerings of stock and the instant millionaires of Silicon Valley and San Francisco.
Oakland still labors in San Francisco’s shadow and the perception that it’s a secondary choice, said panelist Paul Zeger, president and chief executive of Pacific Marketing Associates, which advises developers on the marketing and sales of new housing including Oakland’s Broadway Grand and 288 Third. But Zeger believes perception is changing. Oakland is “the Brooklyn of the West Coast,” he said, comparing it to the hip New York borough. The East Bay city’s Uptown district recently ranked No. 9 on Forbes’ list of “America’s Best Hipster Neighborhoods.”
“It’s a hip, vital, exciting place to live,” said Zeger, who earned a degree in economics from Colgate University. “Accessibility, affordability: If you grew up here, chances are you’ll live here. People are leaving San Francisco because they feel priced out of the market. The Oakland airport is more desirable. Oakland is an alternative choice that provides a lot of positive benefits for people.”
She is invigorated by Oakland’s burgeoning cultural center with new art galleries, pop-up retail stores and restaurants, Myerson said. The 28-story Kaiser Center tower and mall, a 1960s era architectural masterpiece at 300 Lakeside Drive with more than 918,000 square feet, is a downtown landmark. It is largely occupied, mostly with larger tenants, she said.
Great chefs are picking Oakland for their new restaurants, tired of bureaucracy and overregulation in San Francisco. “There’s a lot of organic, creative stuff happening in [Oakland],” said Myerson, who has been with The Swig Company since 1997. “If you look at SoHo and the East Village and other parts of New York, those communities were the first to really take off [before the rest of the area recovered]. You see a lot of that happening in Oakland. You’re beginning to see things come together.”
The Oakland market’s stability compared to San Francisco and Silicon Valley figured into her firm’s decision to purchase the Kaiser Center, she said.
Soon the East Bay should be in full recovery, and is now waiting for a catalyst, a “big lease or two away,” Peatross said. He sees the signs of recovery, including growing building occupancy and stabilizing rents.
“Something good is going to happen,” he forecast. “In six months, we’ll know.”